All Forum Posts by: David F.

it was claimed on my 2016 taxes

I have a 4-unit property that brings in $144K/yr in gross income. Expense-wise my mortgage payment runs $55K/yr and PITI runs about $15K/yr for an obligation of $70K.

Which of these scenarios is correct as it pertains to the DTIR on this property?
1) 75% of rental income = $108K. DTI= $70K/$108K = 64.8%
2) 75% of rental income = $108K. DTI= $55K/$108K = about 50%
From reading, it seems to me that part of the reason banks take 25% off of the gross income is to cover for PITI, so it would seem redundant to count it again as in example 1 above. But then again, I'm not a banker. I'm trying to figure out how much debt this property will carry forward and need to be offset by my other income to know if I can afford to build another property. Thanks in advance.

I've found an ideal land deal for $300K in a prime location I'd like to buy and develop. I'd like to, in time, build 3 quadplexes on the land and rent out the units. I'm not selling any of them. However, I don't quite have the borrowing capacity to purchase it all at once and develop it accordingly, what with DTI restrictions, subdivision costs, etc. I'd also like to avoid a prolonged land contract/loan situation.

Is there anything to prevent the following scenario from playing out, provided the seller agreed to the terms?

Purchase a 1/3rd stake in the entire land for $100K in exchange for the rights to construct the first investment property. I would own 100% of the structure and 1/3rd of all the land, with the seller being a 2/3rd owner of all the land. At a specified time after completion and closing of the first building, I would proceed to purchasing a 2nd 1/3rd stake as above in piecemeal fashion, and then a 3rd. In the end, I would own 100% of all the land and buildings and thusly avoid having to subdivide the land.

Furthermore, I would have a land loan during each construction phase, but at closing I plan to have each mortgage loan cover the $100K land cost as well as the building cost. Could this be done given these circumstances with a traditional agency-backed mortgage?

Thanks in advance for the advice.

Will underpayment of my quarterly estimated taxes adversely affect my mortgage application? I plan to pay them at year's end. Didn't know if that's something the underwriters would know by way of From 4506. Thanks in advance.

@Andrew Postell If you don't mind me asking a hypothetical follow-up I'd greatly appreciate your response. I have 3 properties each of which if financed partially with a non-recourse loan. The non-recourse loans are set up through an LLC, of which I am a sole owner. None of the properties themselves are in an LLC. I want to refinance one of the properties into an agency-backed loan (the properties meet the criteria for conforming loans). Will the non-recourse (no personal guaranty) debt from the other 2 properties adversely affect my DTIR for this refinance? Or will it not count as a personal liability and thusly not affect my DTIR? Thanks!

If my solely-owned LLC finances a 4-unit new construction with commercial lending, can I later refinance using a gov-backed conforming loan in my own name? Assume the property meets all the requirements for a conforming gov-backed loan, but due to DTI limitations I am choosing to start out with commercial financing and go ahead and build the property. Later, when I own more equity and am charging more for rent, I should meet the DTI limits and then I plan to refi as above. Thanks in advance.

My question deals with FHA financing. I'm purchasing a lot where I desire to construct 4-unit multifamily properties. The properties will qualify for conforming loan financing. In order to maximized ROI and grow my business quickly I want to take advantage of FHA financing as much as possible. I understand that I can only have one FHA loan at a time (the exceptions of relocating > 50 miles and growing household size don't apply to me). I would like to build one property at a time and refinance the FHA loan with another investment property loan (investment property refi is offered through my credit union at 75% LTV) once I achieve 25% equity stake, then repeat that process up to 10 properties. I will own the land outright, no loans in a prime location. I've talked with several professionals who tell me the homes would appraise today for $400,000/unit once completed, and it will cost me $350,000 to construct. If I pay $50,000 as a down payment and the real estate market hold up, I would essentially be at a 25% equity stake right away and be able to refinance. I would then repeat the process as many times as I could.

My question is, do you think I would run into difficulty getting approved every 9 mos-1yr for new FHA loans on properties on the same street? While there isn't a specific rule that I'm aware of preventing this, I also know that the spirit of FHA financing is to help finance individuals seeking primary residencies, not investment properties. Do you think that after 2 or 3 attempts at this, an underwriter would begin denying me, or not? Keep in mind, I wouldn't apply for a new FHA loan without having first refinanced the old one, so I would only have one FHA loan at a time. Any advise is appreciated.

I'm looking into having my own multifamily properties built to rent out.  I'm looking for recommendations for a resource (book, blog, etc) that would be a primer for issues relating to procuring the land, subdividing it, etc.  I searched Nolo and Amazon and really didn't see much. 

I've never gone through the process of having a multifamily residence built but I'm considering it/ My question(s) pertain to the process.  Most of the modular builders I'm looking at don't have lots to buy.  I briefly spoke with a builder who said his son was a licensed realtor who could help me find the land.  That sounded a little suspicious to me and it got me thinking about the process.  a) should I have my own realtor for this? b) do I need a realtor beyond that point, to represent me during the construction phase or for the construction contract, or would it suffice to show the contract to a real estate attorney when that time comes? c) am I correct in being suspicious about possible conflict of interest in regards to the above situation? d) should I not talk to builders yet until I've secured the land or involve them so I'm sure the location will suffice?  I'm looking for someone with experience having worked with builders.  Thank you in advance!

I'm considering a new multifamily modular construction in Southern California.  I'm just curious to know, with so much of the construction phase being performed off-site for prefabs as opposed to stick-built properties, why there remains to be such a large discrepancy in new construction cost among locations?  For instance, it's $190/sq ft in SoCal, but in some other places it's $100, absent the cost of the land.

Are there modular builders that offer a more-or-less consistent pricing regardless of location?

Also, who's a recommended modular builder in SoCal?

Thanks!

David