All Forum Posts by: Brittany Minocchi

Congrats on taking the first steps! My husband and I bought our first home at 22 and looking back, we're extremely glad we made the jump (wasn't a househack but my comment still stands). 

You can househack with FHA or conventional financing - FHA will require 3.5% down and conventional requires 5% down. FHA will undergo a self-sufficiency test for 3-4 unit properties which can make it hard to qualify for depending on the scenario. For that reason, and because it's your first property, I'd probably recommend a duplex to start.

Happy to connect and get more info, but you definitely will take a hit to your current rate. I don't know of any seconds for properties larger than 4 units, otherwise that's usually my recommendation to get around losing the rate on your first. 

Hey Tia! 

You have a couple of options:

1. If you plan to live in a unit, you can use FHA or conventional financing. This will allow you to put down a 3-5% down payment, compared to 25% if you were to rent out both units. If you choose to rent out both units, FHA is no longer an option - that only applies if you live there.

2. A DSCR loan. This loan type looks at the rent currently generated by the property OR the anticipated market rents (determined by the appraiser) and compares it to the monthly principal, interest, taxes, insurance and HOA (if applicable). You want the rents to meet or exceed the PITIA, which gives you a ratio of 1.00+. These loans typically require a 20% to 30% down payment depending on the scenario and DO NOT allow for owner occupancy since it's a business purpose loan, so you'd have to rent out both units. The biggest draws for investors are not needing to provide income docs (no W2, tax return, paystubs etc needed), DTI doesn't matter, you can close in an LLC, and not all lenders report the debt to your personal credit (so it doesn't affect your credit score or DTI for future conventional financing). They do typically carry a slightly higher interest rate than conventional and often have a prepayment penalty. The penalty is triggered if you refinance or sell the property and can be anywhere from 1-5 years. Most lenders allow you to buy the fee out, but your rate will be higher as a result.

I hope that helps! Feel free to reach out if you have any questions. 

Not a HELOC, but you could do a debt service-based closed end second. It would be lump sum, not a LOC. Expect 11-12%+ rates right now.

Hey Inga - 

You shouldn't have to go with private money to make this work, that would be more expensive than necessary. DSCR loans have varying seasoning periods but if you completed rehab that can support the new value, you can bypass that requirement. Happy to chat further if you'd like to reach out!

Yes, you will need 2 years of employment history and be employed at the time of application for an FHA loan. You also cannot close in an LLC or use business credit to fund the down payment.

If you're limited ot 10% down in any scenario, I'd opt for a house hack. You'll need a minimum of 15% down on an investment property, more for a multifamily property. You can go the FHA route with 3.5% down or conventional for 5%. Conventional route would work for your 4-unit plan, you on't have to worry about a self-sufficency test going that route like you would with FHA. Riskier to involve another couple, plus that takes away your potential rental income from that unit. Happy to chat futher if you have any questions, feel free to connect!

Totally up to you! If the goal is to acquire more properties, it sounds like it'll make more sense to refi the $145k-$160k property since the other one won't leave you with much to re-invest. These figures all account for 75% LTV too, so if you decide to go with 80% you'd be able to pull more cash out. Trade off is a higher rate though, so your cash flow would decrease. If you have any other questions, feel free to reach out! Happy to help. Good luck :)

 So your cashflow drops from $500 to $250 on that property, but you pick up another $300-$600 on another property. Even at $300, you're still cashflowing a tiny bit more than pre-refi on the first property....plus you've got another appreciating asset. The numbers will be huge here though. On your first scenario at $145k value @ 75% LTV, you've got $32k to play with BEFORE fees. I'd deduct at least $10k between lender/title fees and escrows, so now you're at $22k. If you figure 20% down on the next property, that puts you at a purchase price of $110k. Is that doable in the market you're planning to invest in?

The other scenario assuming $105k value @ 75% puts you at $5,750 BEFORE costs. You'd need to bring funds to closing on this one (assuming the entire $73k needs to be paid off). If it appraised at the higher figure, you'd maaaaaybe walk away with a few bucks, but not enough to do much with. 

How far under $100k? Some lenders will go down to $75k, few will go below that. You'll also see higher rates/fees below that $100k threshold as well, but if your numbers still pencil out, you should be good to go! Happy to discuss if you'd like to connect.