All Forum Posts by: Christian Allen

I've used Homestar Mortgage in Providence for a 203k loan. They have a 203k inspector they work with. PM me if you have any specific questions.

Depends on your goals. If you plan to pay off your property more quickly, a 15 year note usually comes at a lower interest rate. If you want better cashflow typically a 30 year is better because it reduces the monthly payment giving a better COC return.

You can add Signature FCU to that list. They do HELOC and HEL on investment properties up to 75% CLTV. Lend in most states I believe.

@Tyler L. I have similar hesitations about investing in the area as you do. The way I see it, it's unlikely things will suddenly go bust overnight in just this region of the country and property values drop significantly.  More likely if there was going to be a downward trend in the NE it would happen over many years at which point someone with their eye on the market would notice and could get out before their returns were washed away.  

If you can still make money in the area, I see no reason to stop. If vacancy rates start to climb and property values drop it may be time to exit the market. The NE has some of the lowest vacancy rates in the country so the demand for housing is strong. 

The FHA 203k loan can be used for this purpose. You can finance the repairs into the loan. I've done on in the past and it requires much more paperwork and inspector involvement but it can be a great tool to get into a multi for little down payment.

@Joshua Costa I've done the refi out of one FHA into another within the same month. As you have found I had to do this by getting a non-owner occupied/investor loan to refi the first FHA into. This came with a required 25% equity and a higher interest rate. As Anthony has mentioned, it requires extenuating circumstances to break the owner occupied requirement on the mortgage.

@Steve Pickenpaugh make sure to talk with the bank you plan to use before going under contract for the multi. I've heard some banks won't do loans if you're going from a single family to multi family because they know you are doing this for investment purposes which the FHA isn't exactly supposed to be used for. Worth asking the bank first.

To be able to recycle the FHA loan every year you need to BRRRR each of the properties you buy to gain the 20-25% equity. In the current market this likely means the worst property in the best area you can find. I've done it a few times but it's only been from doing major rehab of multifamily properties that cashflow well. The cashflow part is just as important as the equity gain because when you go to qualify for a second property, they will use the rent numbers from your first.

If you buy a previously rehabbed property in the current market, it is unlikely you will be able to ride the market to the 20-25% you need to refinance into a conventional loan. When you refinance it is important to get a loan product that is not tied to you occupying the property or you may be stuck there for an additional year depending on the terms of the loan.  This "investor" loan type often requires 25% equity and brings a higher interest rate. 

@Nelson Taylor I've purchased 3 family buildings in the past without the smoke certification. Usually the lender will hold some amount in escrow for 60 days until the certification has been given.  I'd suggest talking with the lender you are working with and the title company of choice to see if this can be setup.  

@Andrew Weitzel If you are going to buy it as an investment property, you're most likely to put down 20% minimum. Not many banks will allow less than that for a downpayment.

2. The trouble with refinancing with so little equity is you are going to lose both on the interest rate change and additional closing costs for the new loan.  

3. HELOCs on owner occupied typically require 80%LTV, doesnt sound like you have that much but if you do it could be an option that would have a lower interest rate and fewer closing costs compared to refinancing. Some banks will do a 100% LTV Home Equity Loan which could be an option you can look into. Check around at your regional credit unions.

4. Seller Financing is a great tool if the owner has significant/100% equity in the property.  It's possible to do with a Sub-to loan but that can get complicated as well as risky (due on sale).  To explain to a seller the benefits you can show them how they would get a 6% return on the value of the property over the life of the loan.  Websites like https://www.mortgagecalculator.org/ can breakdown the P&I as well as show the total interest paid over the life of the loan.