All Forum Posts by: Gabe J Schwarz

Hey Folks,

I'm looking to purchase my first investment property and I'm on a bit of a tight schedule because I'm looking to leave my current gig towards the end of July. I have plenty of wealth in investment accounts to cover the purchase, but I'm trying to maximize my passive income, so I'd like to leverage a mortgage using my current income to pay for as much of the property as a I can. I expect my rental income to cover mortgage payments of course, but I can also cover things as needed by pulling out or borrowing against my stock investments - so losing my active income source isn't a huge concern for me. The problem is, that this seems like the sort of thing that would be a huge concern for most lenders causing them to either give me worse rates or no mortgage at all...

So, I have 2 general questions:

1) Is it possible / practical to get a mortgage without an active income source? If so, how much would this effect my mortgage rate? Is there something other than a conventional mortgage I should be looking for in this case?

2) If I'm able to find a strong candidate property that I want to purchase, do I need to 'close' the property before my loan is completed? I'm concerned that if the closing happens after I leave my job, the mortgage legally would need to be re-evaluated and could be set at a much higher rate or not be approved at all. Of course, I don't want to break the law at all and my understanding is that if I left my job and didn't disclose it before the 'loan is complete', I'm at risk of committing loan fraud. Is there some standard way to expedite things so I can ensure the loan is in a state where I can leave my job without losing the loan?

Thanks for the responses!

I've been chatting with more mortgage lenders and realtors all day and figuring out my local money sources; this stuff is just fascinating. Very excited to be jumping in.

I think the biggest question perhaps in the short-term is how much do I have to lose if I do *not* get everything completed before losing my active income source? Will I be effectively forgoing any ability to get a mortgage by not having any income or dramatically drive up my income rates? The reason I mention the 'high income' in particular is simply because right now, I seem to be a pretty solid bet for most lenders whereas I'm not sure if my net-worth in stock will be sufficient to get a good mortgage rate since my 'income-to-debt' ratio will be dramatically different.

I don't intend to try taking on a bad deal in the short-term just because of the whole mortgage-lendability-risk issue, but I'm trying to figure out how much of an issue it really even is in the first place and how much I should take it into consideration.

If I don't have an active income, presumably (and please, correct me if I'm wrong here) I'd still have some potential to get mortgages, but they'd be at a higher rate (e.g. maybe a couple percentage points higher)? It seems like cash-on-cash percentages can vary much more dramatically than a mortgage rate, and so perhaps it'd be worth holding out for some 'better' property. If this is the case, is there some reasonable rules of thumb to use here (e.g. how much should I be holding out for and what kind of a range in mortgage rates should I expect?)

Hey folks,

Sorry for the rather broad discussion - I've got a bit of an odd situation right now which is rather time-sensitive, so I wanted to get this out sooner (even in a more broad & vague form) rather than later.

I've decided to quit my relatively high paying job in the near future to travel for awhile (couple years, visiting home ever few months or so) and possibly even retire early. I have significant amount of money invested in stock right now and reasonably trust the average index fund return rate of ~9.5% to continue (of course, been getting much higher than that the last couple years, but we're in a bit of a bubble). I've got other plans under way, so I don't have a ton of flexibility to prolong my employment to give more room here. I live quite modestly relative to my income and I'm young enough that I'm fine jumping into a job again if I need to, so I've got a pretty high risk tolerance (so long as it has comparable reward potential, of course).

I've been planning on just making money off the investment income, but I've always been rather interested in real estate investing and it occurred to me recently that I will probably have an easier time getting a mortgage now with my income than I will in a couple months when I don't have an active income. So, I'm very interested in prospect of using a portion of my net worth to invest in real estate now before this opportunity is lost (i.e. from not being able to get a mortgage, or at least as good of one, post-quitting)*.

So, I'm looking to try to acquire my first rental property during the week of 7/3-7/10 - which is when I'll be in the area I'm looking to invest in, and be living long-term starting in August (aside from traveling 90% of the year).

I've watched a handful of YT videos and read some blogs on real estate investing in the last day, but I'm looking for any quick advice that might make a big difference. My current thought is to look for a small multi-family unit to get started; I'm looking around a cost that is around 60% of my net worth in full - but of course, I'd like to leverage a mortgage so the majority of my net worth can remain invested elsewhere (incl. other properties in the future).

My current state (I'll add more as time goes on if folks are posting):

* Just got pre-approved for a %5.25 loan from Quicken with 0 points... Is this a good rate, should I be poking around a lot more or invest the time in house-hunting? This will be my first property. Should I invest in points?

* I'm looking at properties on Zillow & Craigslist right now; are there any big things I should be looking for or are there any useful overviews on the process here?

* Are there any more extensive calculators/spreadsheets for managing income flow around all of this and comparing against the opportunity cost elsewhere (e.g. stocks)?

* How much should a property manager cost? Given I plan on doing a lot of traveling at the same time, I'll probably end up need a property manager running most things (incl. finding tenants).

I'm of course going to do more internet searching for a lot of this information and continue doing more research around here over the next couple weeks, but if there's any immediate 'gotchas' I should be watching for or things I should get rolling now because they take time (e.g. setting up appointments to see places, getting mortgages pre-approved). 

Sorry again for the broadness, thanks again for the wisdom!

Cheers,

Gabe