All Forum Posts by: Dominic Pizzi

Hey @Dominic Pizzi - I like the change of gears, should help generate more interactions ;) 

My own experience has been investment financing first, then going through the regular consumer route. A tip I can give towards this is working with a bank that is local to your investment market, as well as one that allows you to count your potential rental revenue towards your approval (for multifamily). 

Hello Dominic! My thoughts on this is laid down here. Hope it helps!

A big question for people buying a property, whether it’s an investment property or a primary residence, is “How much house can I afford?” Start by looking at a mortgage calculator to get an idea of rates and monthly payments, and then you can get preapproved to see how much money you qualify for.

Get Preapproved First

One of the biggest pitfalls that home buyers of any kind make is searching for a property before securing financing. Let’s say, after months of searching, you find the perfect rental property. But by the time you get preapproved for a mortgage, the house is already under contract with another buyer. Get preapproved now and have the ability to jump on a good deal at a moment’s notice.

Agency Loans For Investment Properties

For an investment property, you'll likely use an agency loan, which means the loan would be backed by Fannie Mae or Freddie Mac. In most cases, you won't be able to get an FHA or VA loan for an investment property. The exception to this would be if you purchase a multiple-unit property and plan to live in one of the units and rent out the others. If you're planning to go this route, you should start by talking to a Home Loan Expert.

Requirements For Purchasing An Investment Property

The agency loans available to you will either be a fixed-rate mortgage or an adjustable rate mortgage (ARM). Both of these options have specific requirements when it comes to the down payment and credit score.

How Do I Determine The Potential ROI For My Rental Property?

When looking for a great investment property, the first question you need to ask is "Can I actually make money?" If the answer is no, it's obviously not a great investment. To see how much money your property could potentially make, you'll need to consider the return on investment (ROI). The ROI can be calculated by first finding the property's net annual income. This is the rent money that's left over after you've paid the taxes, insurance, property management fees, expected repairs (plan to spend 1% of the property value on this), potential vacancy periods, HOA fees (if applicable) and any utilities that aren't going to be covered by the tenant. To find the ROI, take the annual income and divide it by the amount you spent on the property. For example, if the net annual income is $7,500 and you spent $100,000 for the property, your ROI is 7.5%.Use this calculation to see if each rental property is a good potential investment.

What Makes A Good Investment Property?

When scanning neighborhoods for your first rental, there are a few specific requirements you should be looking for to determine if the property would be a good investment. In a nutshell, you want a house that requires low maintenance, has limited vacancies and allows you to have a good rent-to-value ratio.

@Dominic Pizzi

If I had to start all over again, I'd look to acquire a 2-4 unit property with an FHA low-down payment mortgage.

Getting it under market value would be a bonus.

So, would using an FHA 203k renovation loan, which would allow me to buy something unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.

Hopefully, I would increase the value of the property in 1-2 years and be able to refi out of the FHA mortgage. I'd also learn a lot about maintenance and managing tenants.

Then, with my hands-on experience, I could decide if I wanted to repeat the process or target 5+ units - which my experience would help with lenders.

Good luck with whatever you decide to do!

I'll be honest, I new to the private lender idea. I'm trying to vet a lender and this is all I can find. I have the LLC filing, their website, and other than that I'm not sure if I'm able to find anything else (or should be able to) to vet this private lender. My initial hesitancy is that the rates look really good, which gives me the "too good to be true" feeling, but I've seen other people find good rates as well. Any help in this endeavor would be much appreciated.

Missouri State Filing

Website

Hey Gang - I'm looking to locate a lender who will help fund a condo flip in central Connecticut (ideally also fund reno costs). I know when it comes to financing condos, it can be tricky. However, this condo is warrantable. Any and all recommendations are very much appreciated.