All Forum Posts by: Jason Wray

Lee Ann,

I have seen an increase in investors buying in TN and Knoxville, and around Nashville is still a Hot market. You really cannot beat some of the home prices in and around Knoxville especially with annual property taxes some as low as $400 a year! You still have the Mountains and the STR market there will a always be hot for the most part.

1031 exchange is smart and easy in terms of the sale and making sure all of the boot is used on the new purchase. Its fairly easy to handle on the finance side as well if you are going to use a mortgage for the loan and the 1031 for the down payment. Regardless of what you put in you can always pull out with a cash out refinance 6-12 months after the sale.

Have you played around with the idea of doing a cash out refinance on the NY home and using the cash as a down payment for the TN property. Just wondering if there is a sweet spot to rent the NY property to cash flow and pull out just enough to cover a down payment ot enough for the TN purchase. Would be better to have (2) homes debt servicing themselves with some cash flow for higher assets/equity down the road.

Mirbeni,

Sounds like you are moving into a direction of growth which is great. Few things to help offer some insight or options. If you own your own business and you have a "Business Checking account" you need to start paying all of your vehicles and credit cards out of the business account if you are not doing it already. If you can show either 12 months cancelled checks or 12 months bank statements showing vehicle's or credit cards paid from the business account the bank "Omits" or removes the debts from your personal DTI.

Have you calculates what would be the maximum amount you could take out of your home either cash out refinance or line of credit to use as a down payment versus selling the home. If you can get out enough cash and still cash flow it might make sense to keep the home. One important tip is make sure you take out the cash or line of credit before you move out so you can get the primary home LTV and rate.

Once you move out its non-owner occupied and the rate is higher and LTV for max cash out goes from 80% to 75% LTV. Buying a 2-4 unit is just a smart move in general because it allows you to buy a future rental with less money down. It also decreases your overall payment on the mortgage since you have another unit(s) helping with the monthly PITI payment.

You can also take out a Heloc or Heloan that will keep that first rate of 2.25% in place. Mortgage rates have come down since December so it helps afford the new cash out payment.

Ursula,

At the end of the day as a landlord/owner you do not want to rent to anyone who has bad credit and does not pay their bills. You also want to avoid "tire kickers" or people who are not ready to rent and just wasting time. How you avoid that in most case is to take an application for a pre-screen to do the research.

Like a Banker we need to take an application before we send out an approval and that’s not much different than renting a home. What I would say is develop a script that you use to make the prescreen seem like its a renter tool or "benefit". You could say we use this as our way to keep all interested parties in our "Approved" database so that as new properties come up you are already in the system. This helps you have a better chance on being the first person to know when a property is available.

Basically helps us gauge your income and your Max monthly payment so that we can align you with the right rental. Although we do look at credit its not an ultimate decision maker instead its just a way to verify who you are in a legal way other than a simple drivers license to protect all parties.

No, a heloc is based on current appraisal not future. There is a renovation loan that uses the ARV to lend in "Advance". meaning if you need cash to renovate or build its uses the future value ARV and lend off that usually 80% LTV/LTC.

If you are talking about an investment property its even harder in terms of a Heloc. Even once the homes is renovated a Heloc on an invesment property is tough to find. The lenders that do offer them want a 60-65% LTV Max and offer a higher rate versus a cash out refinance.

Alexander,

Manual underwrite basically means that when a bank/lender runs its approval its done through an electronic process thorugh software DU/LP that gives a finding. Usually Approve/Eligible, Ineligible, Caution, Refer, etc. When the DU/LP approval cannot be given due to a "lower Fico" or "DTI" is above the banks/lender Max DTI allowed. There area few other reasons but in most cases its due to higher "Risk".

All loans are Fico Driven for the most part so when the Fico scores are lower/DTI is higher it will always result in a higher rate on Manual Underwrite. You will still submit the basic documents while each bank/lender has different requirements. Usually its:

last (2) years W2's or 1099's, 

Last (2) paystubs as of today they generally want Dec 31st last paystub for 2023 to show year to date, 

Drivers license, 

Copy of the account where down payment funds will come from - Bank statements (2) months all pages.

If you own a business they can also require your 1120's or 1065's depending on the income they are using.

Zachary,

Based on the information its looks like you could be approved. The missing pieces would be income versus loan amount to establish a DTI. There are a few things that would be done in processing to verify and explain but short answer is Yes.

Charlie,

If it's not broke don't fix it so if you clearing cashflow and do not foresee major issues with the MH in the near future continue to ride it out. If you feel the units may need a renovation and will cut into profits just sell it to a renter for a profit.

I would tell you to start looking into buying Manufactured or Modulars own their own lots going forward. The long term investment offers more investor friendly options like faster appreciation in equity, easier to take cash out and finance.

You also do not have to worry about having to all of a sudden lose cash flow due to an increased lot fee or restriction in any way to you or your renter due to park rules/regulations.

Jay,

Mortgage rates are coing down I would pull out some cash and start looking for a another REI property. Increase your doors by using the equity that you already have to increase your overall cash flow and future position. Maybe look at a few states that offer a higher STR/Airbnb option like Florida. That way you can have a home paid off in the futre when you want to retire and move out of NY to avoid snow & cold weather!

All in all its a good time in many states to make the move and NY does have several cities where the taxes and home prices are not that bad outside of the city.

Why not just do a cash out refinance you can go up to 75% LTV using Fannie/Freddie or with a DSCR program.

Jy - I would reach out to @Lucia Rushton she is an agent in the area and can help you find a good 2-4 unit.