All Forum Posts by: Carlos Valencia

Hi Cody, 

Continue to network with like minded individuals in your local area as well in the BP community. Learn as much as you can from their scenarios and study the markets you would like to get started investing in. Highly recommend your current area where you live. To keep it simple if you have good credit and a decent amount of assets this will depend on your market on the amount needed but try to always have access to a good amount. Lastly make sure you have a high income if possible to help fund those assets asap so you can have flexibility when entering the real estate investing world. By having those 3 areas covered you will have more opportunities on what you can and cannot do. 

@Albert Bui @Matthew Kwan

Hi Ken, 

Those are some great points thank you for sharing. I agree with you not real estate investing is not an absolute meaning that what may have worked for one person doesn't mean it will work for you. There's so many moving parts in this business that just by removing or adding one of those steps or items can change the scenario completely to good or bad thing. Everything people read on BP should be taken like a grain of salt and do reach out to experts and get the real answer for their scenario to make sure they get the most accurate solution. Pros and Cons when it comes to anything Real Estate. 

@Albert Bui @Matthew Kwan

Hi Nora, 

Real Estate investing can be messy. You have to be ready to accept the risk and see if its worth the benefit every time you make any decision about investing. Also this is a long game not a get rich quick scheme. If you are thinking of starting out out of state it seems like you have done your homework on what you need to look out for and how to go about it. 

Many of our investors we work with usually start off with house hacking which is the strategy where you buy a home as a primary and rent out the rooms or units to help pay the mortgage and the goal is to add value and while living there and move out and either cash flow or break even in order to go acquire the next one. By buying as primary it allows you to get a loan that is fixed for 30 yrs and it will have the least cost meaning rate. Rates are much cheaper when purchasing as owner occupied. 

You can buy a home as an investment but it will be like a 1% higher plus you will need to out 20%-25% down. If you have enough assets to go this route that's definitely an option. You just need to ask yourself of thats the best use of your money or is it better to purchase as owner occupied and only put 3.5% -5% down and use the rest of the money to work somewhere else. 

I would say to attend local real estate meetups in your area and talk to more investors and ask them questions to learn from their mistakes and possibly meet a mentor while there. Good luck with your real estate investing journey. 

@Albert Bui @Matthew Kwan 

We deal with this scenario all the time with getting lease agreements from our clients as that is our main niche working with investors who buy 1-4 units as rentals. Calculating rental income and providing lease agreements is nothing new for us. Let me know if you have any other questions. 

Oh I see so your assuming the loan and taking over got it. 

If you are using rental income and you already filled your taxes with those rental properties then they will use the your tax returns and schedule E to calculate your income. But if you have properties that you just started leasing then they will use your lease agreements for income at 75% of the rents. The 25 % is accounted for vacancy due to the lender being conservative. But tax return rental income they use 100% of the rents. Meaning that after reviewing your tax return and calculating your rental income whatever is left they will use that whole number and subtract it from your mortgage for that property and use that final figure. Hoepefully it breaks even or you are positive. If the figure comes back negative it will count towards your DTI. Long story short in order to use rental income they will need your lease agreements or tax returns depending on how long you had the property as a rental.

Hello Deonte, 

If your looking to buying an investment property you need to put 20% down minimum plus have reserves. Only way you can put less money down like 3.5% - 5% down is if you buy as owner occupied which many people do in order to get started. They live there for 12 months then move out and rinse and repeat until they can no longer can and then they will have to look at other options to continue purchasing but by then you'll be an expert. 

@Albert Bui @Matthew Kwan

Hello David, 

if you are putting 20% down already why not use conventional instead of FHA? On conventional you can put down as low as 5%-20% down if you want. Many sellers also prefer conventional offers as opposed to FHA due to the less strict guidelines when it comes to FHA offers. FHA has a few more disclosures. Based on your scenario I dont see why you would not qualify to use FHA since it doesn't appear you already have an FHA loan so the self sufficiency doesn't apply amongst others. As long as you qualify based on income I see no other roadblock.

@Albert Bui @Matthew Kwan

Hi Julie, 

I'm happy to provide you a contact feel free to send me a message. 

Hello Sahil, 

Unfortunately that is the reality cash flow is hard to come by especially in this market. A few strategize people use to attempt to cashflow or at least break even is rent the house by the room instead of renting out to a family. Adding value to your property like an ADU/DADU but those also cost money to build so overall you still wont cashflow. The good thing is that at least your property will gain appreciation so its great for long term hold. Another strategy is looking at short term or mid term rentals thats one way to cashflow but it does take more work as your basically running a hotel business but once you figure how to automate things it will get easier at least thats what the short term rental investors tell me lol. Last thing I would suggest is to start with house hacking strategy where you buy a home as your primary weather it be singe family or 2-4 unit and rent out the other units or rooms. This is the best way to get started with lowest risk as you will only need as low as 3.5% -5 % down and you will also have a place to live. This is a great opportunity to learn a lot and make mistakes where you wont be sweating bullets.

@Albert Bui @Matthew Kwan

Hi Lisa, 

Right now DSCR loans are hovering around high 7's to mid 9's but there's so many factors that can affect the rate you can qualify for as credit, DSCR ratio and assets play a factor on what rate you can get and also if you plan on paying points. Its best to get in contact with a lender go through the pre approval process to get a more accurate rate based on your specific scenario. Ideally not until you lock is when you will get the actual rate. Rates are always moving throughout the day.

@Albert Bui @Matthew Kwan @Kin Meng Sio