All Forum Posts by: David A Lisowski

I think the 50% rule is just a tool to make quick offers and weed out garbage deals.

You can also reverse engineer it to adjust the offer price so that the numbers work.

But it doesn't replace actual research and due diligence. Your inspection period should give you time to research and calculate the numbers.

You should use actual financials, as others have mentioned, for the final bit of analysis. It's doubtful you'll get rent rolls or financial history unless you are under contract, but it's possible you can get that information sooner (or without being under contract).

I'm no expert though

@Ramsey Blankenship

Awesome to read! Giving you a follow.

My wife and I are looking to have a similar portfolio in the next few years.

Currently in the process of securing our next investment property.

We are actually looking to invest heavily in the LTR market in the area. I understand that margins might be tighter, and income may not be as attractive as the STR market, but we also don't have the capital, time, or competitive edge to deal in the STR market in the 30A corridor right now.

Don't get me wrong... I'm still analyzing deals.

Maybe looking to do a Q3 or Q4 partnership purchase for a LTR.

For now, just building a network. Happy to connect with folks. Also, happy to be the "boots on the ground" for any potential deals.

@Trent Hardy

Welcome, Trent!

My wife and I have owned since 2018, and moved to 30A permanently last year. We are in a similar situation.

I missed the meeting in Niceville just due to travel time for me, but I did find a Zoom meeting to attend that is the last Tuesday of each month:

Real Estate Investor Networking (zoom meeting) https://www.meetup.com/FWBRealEstate/events/tqkcvryccfbnc/

I can't vouch for this since I have not attended.

I'm only starting my networking so I expect to make progress in this front in the next 90 days.

Real Estate is nuclear here so there's got to be tons of information and meetups, etc. Just want to catch the wave.

In terms of DTI, each rental property income should be offsetting the new debt. So in theory, your income should be increasing faster than your debt with each investment purchase.

Unless your properties are losing money or you have a bunch of other liabilities on your credit report, it shouldn't be an issue. You may need a tax filing to have verified income.

Unless you meant the FMNA/FHLMC limit of 10 financed properties...?

Ask this lender for the rental calculations they are using for the rental properties. Compare to what you have.

I'd recommend a DSCR loan. Might be higher interest rate, but doesn't qualify you on DTI.

@Kirsten Milliken

I've used Montgomery and Associates. They will compare and shop for the best policy, and have quick service.

Worth a quote anyway. I feel their customer relations are great!

Visited a new build neighborhood in October 2017. Established a HELOC on our primary in spring 2018.

Wrote the EMD check in May 2018. Closed in June 2018. On the rental market by mid-July 2018.

So not quite the 90 days.

@Matthew Horstmyer

If you plan to use traditional financing, you'll have to provide reserves for each property owned every time you get another investment loan.

FNMA goes with 2%, 4%, and 6% of the unpaid principal balance. FHLMC requires 6 months, then 8 months. And these are general. Each situation varies slightly.

But aside from that, there will be times you need to fix something or spend money you weren't expecting to... for most beginning investors that can be disastrous even with cash-flow from other properties.

If you can build a cushion of 6 months reserves without hindering your growth and new investments, that's a good number. In the future with more experience, you might be okay with 3 months.

I guess I failed to mention that we did not get an FHA loan on the vacation home, however.

Why do you want an FHA investment loan?

I'm not sure that's an option... but I could be mistaken.

@Hernando Quintero

We did that with a home in TN to purchase a vacation rental in FL.

If you already have the HELOC established and can draw the money, you can deposit it into your account. That can help lessn paperwork in qualifying for a new mortgage because it will give credit time to update with the HELOC balance and payment (possibly).

Be honest though. When you come to the application Declarations, you should say "Yes" to Declaration H. "Is any part of the down-payment borrowed?"

Many people fear that answering "Yes" will disqualify them. And it can. It doesn't always.

In this situation, you are "borrowing" money from yourself (your asset). The concern with the underwriter will be that you can cover the payments for that debt (and all the other current debts) AND the new property.

What is so stressful for people is the logistics of when to draw the money, getting updated statements and balances, updating the credit report, etc. It's a little more demanding and rapid fire (if you aren't prepared) than using deposits in a bank account. There are some steps you can take in advance of making an offer that would make qualifying easier (less of a headache), but no guarantee. Underwriters are people too, and they have to make judgment calls from time to time. They aren't perfect.

I hope this helps.

@Ralph Pombo

Portfolio - When a bank or lender underwrites the loan, and holds the liability (usually to term). Their assets and deposits determine their ability to lend. These loans are not typically sold on the secondary market so they do not have to follow conforming (FNMA, FHLMC) standards.

Usually these will have higher interest rates. Probably more on commercial-side for underwriting. Rent rolls and DSCR, maybe not a debt-to-income calculation. Usually have PPP (pre-payment penalty). Might be 20-yr amortization rather than 30.

Search locally. Credit unions, Bank and Trusts, non-TRID lenders, etc.

Hope this helps!