All Forum Posts by: Isiah Ferguson

Hello, I currently have 2 separated Pre-approval letters from 2 different lenders. 1 from a mortgage broker and another from a credit union. My question is can I use both separated approval letter to get 2 different properties under-contract to purchase ? 

This is for motivational use only. Me and my wife closed on our "Primary Residence" back in August 2018. I believe is is a C+ neighborhood. In the back of my mind, I figured somewhere down the line this house could potential be a rental property. 

PP - 200k

PITI- $1,350

4b/2.5b 2,996sq

Interest rate - 4.875 no PMI

5 year ARM/ 30 year amortization

During the purchase, I just assumed once the 5 ARM is time for renewal we would have enough equity to refinance into a loan with an 80% LTV to avoid PMI. We add some personal touches to the home. We undated the kitchen, all new paint throughout, living room, open some walls and closed some. In total, we spend about 30k for upgrades. My wife fell in love with the neighborhood and built great relationships with a few neighbors.

Fast forward to January/February 2021, we refinanced 3 years later instead of waiting the full 5 years of the ARM.

Appraisal - 262k

New loan - 201k

We received a check at closing for about $1,900.

PITI- $1,117

Interest rate - 3.375

At this point our mortgage got lower and we was happy with that. We had thoughts about a cash out refi but instead we preferred a lower mortgage payment. We could've got a lower rate but we decided not to pay for interest points. After about 1 month, somewhat we are ready to turn our home into another rental property. We found a New Construction duplex on the MLS. We spoke with a lender to get pre-approve but got denied because of the '100 mile rule -The FHA has a requirement that specifically states the new primary residence must be 100 miles away from the old departure residence. This means you cannot keep your house and then turn around and buy another one a few miles away using an FHA Loan for the acquisition of the new primary home." 

At this point, we had to find another route but we refused to put 25% down because we didn't want to touch our cash reserves. From here, we started to have deeper discussing about rental out our now home in which we just refinanced. My wife definitely wasn't on board emotionally because she love our neighborhood and she comfortable. At the same time, she understands wealth creation and our family long term goals. Instead of trying to buy a new "Primary residence" right away, we decided to rent apartment again to avoid 25% down payment and the "100 mile rule". Going to an apartment was a semi low blow because we went from a damn near 3,000sq home to a 2 bed 1,100sq. It took a certain mindset to make a sacrifice like this with 2 kids.  

We finally agree to rent out our "Primary residence". I'm super excited at this point. My wife is on board and we're focused on the bigger picture and our future together. We making living in an apartment work for us. We come from humble beginnings, so we know how it is as far as making it work. 

We use Cozy and Realtor to market our new rental unit. We got a lot of interest and did some showings. Our standards were pretty high. We mainly focused on job security and credit score. Along the way, we had a few potential candidates ask us do we take Housing vouches ( Section 8 ). We have 3 other rentals but we never had tenants w/ a housing voucher. We really are not familiar with of the program work from a landlord standpoint. Well I do have some experience as a child on Section 8. My parents were in the housing program. I remember going to see our specialist and we lived in the housing projects. So we know the vibes somewhat with the Housing Program. 

We decided to selected a few potential tenants who had vouches. My wife did the showing. We found a woman who had good job history and some like overall a good person. We decided to give her a shot. We the pandemic going on and in our area for renters it seem like most people had to restart with their job situation. A lot of candidates was inconsistant with their work history. 

We almost at the finish line with our Housing Programs tenants. We did everything we need to do including our new tenants. the move in date is may 1. 

Numbers :

PITI $1,117

Asking rent - $1,849

Section8 portion - $1,643

Tenant portion - $206

Net Cash flow without Repairs/Maintenance - $732 monthly

We've been living in our primary residence for 2 years now. Our payment PITI is $1100 and the market rent for our house is $1800 per month. I would love to turn our home into a rental but my wife doesn't. How can I persuade her this is a great idea ?. At this point she emotionally attached which I understand to a degree. SHe understand what REI can do for us but doesn't love it.

It seem like paying cash for a property and keeping is free & clear isn’t good. But does anyone has a free & clear portfolio ? What are the benefits of being free & clear. I have 2 free & clear rentals and feels good but I am tempted to use leverage to scale. On the other hand, I feel like it better to save up the cash again n buy other free n clear rental. What u think ? 

Congrats. Just do it, your gonna learn so much, house hack, & get your first property. It’s a win all the way around the board. 

@Dave Foster Thanks for the feedback. Idk but I think so many options can be not so good lol. Your scenario giving sounds like a great idea especially to avoid paying the govnt any of my funds. I will consider both buying 1 rental cash and another leverage. I think that’s a win win. Keeping my primary with debt isn’t a bad idea either. It’s cheap financing and it’s only about 28% of my earned income. 1 of my free and clear rentals right now can wash the payment if need be as well. Manly, as long as me and my wife is on the same page, it’s all worth. With her it’s about comfort and stability, she can care less about buying property but understand what it can do for us. Somewhat complicated but we’re figuring it out. We’re first generation intentional wealth builders in our family.

@Jasmine H. I completely understand. I swear I need a life coach. Me and my wife did not grow up with many choices and now we have so many ugh. But we are blessed. We are first generation when it come to investing, so we’re figuring things out on the go. It’s a journey and we are super positive.

@Jasmine H. Hey now, thanks for reaching back. Congrats on all you guys success. Family legacy is super important and your doing it. As for me and my wife decisions we still have our 2 rentals free and clear. Looking to 1031 exchange our 1st buy. It has been great for the last 4 years, seriously no real problems with consistent renters. Looking back, we just don’t love the area. We’ll keep our 2nd rental, it’s perfect no complaints. When it comes to our dream home me and my wife meet in the middle. We still have great school and great neighborhood but we kinda too the millionaire next door approach. Great neighborhood, convenient area to highways etc & 5-7 minutes from my job. It’s not our “dream home” bit my wife and kids love it. Also, throughout the process i always kept in mind to buy a house which can be a potential rental long term. We still figuring things our moving forward. We haven’t yet use debt for a rental but our home is financed. As far as of right now, with the sale of 1 of our rentals coming up. We tryna see what’s a better route to take. 1031 exhange as I mentioned earlier or take the funds from the sale to payoff our primary residence. Also, we 100% consumer debt free expect our house & increased our earned income. But thanks for checking, we appreciate it. Best ofluck on your journey.

This is a world crisis which was unexpected and there’s no telling when this virus will be defeated. My 3 units Free & Clear. I haven’t received any call as of yet and hopefully I don’t. But with proof of lost employment, for the first month I will document a agreement for my tenants to forfeit their security deposit for the 1st month. If this issue isn’t fixed after the 30days, I will send a letter document going into the 2nd month basically stating the next 30days our company will forfeit your rent payment but if nothing is paid by the 3rd month, we will filed eviction immediately and preceded with the process. I don’t mine throwing in a extra FREE rental month because my properties are Free and Clear. It’s only right.