All Forum Posts by: Jason Wray

Ty,

How are you running your numbers in terms of toal purchase price, down payment.

Rates are not at 6% for an investment property unless you are putting 30% to 40% down. If this is a Primary home you can get a rate for under 6% with credit above 720. On an investment you will need 15% down minimum so at a sale price of $161K your mortgage P&I would be around $941.80 that based on a 7.75% 30 Year.

What are the common rents of that market?

If you shared the down payment then split should be 50/50 unless someone is putting in work or sweat equity. Having a mortgage in only one name is a benefit to you both going forward. Its not a reason why someone should have a higher equity stake per say.

Spouses and Investors should split purchases between themselves equally to avoid both being on all. This is due to the Fannie/Freddie rule of only allowing 10 properties max reporting to credit. Not owned overall but only 10 on credit so its wise to do that back and forth method if possible.

Once you hit your Max 10 or Max DTI you will then start using Non/QM loans like DSCR, Bank Statements, 1 Year 1099 program etc. You can also put 5 or more of them into a commercial loan which does not report to credit once you hit 10 or more. At that point you should have an LLC or partnership created.

Then at that point you may want to reach out to a good real estate CPA and get their help and advice. Eventually to buy more properties you will do a cash out refinance to pull out cash. During that phase it would be a good time to talk strategy to ensure equal cash out based on appreciation or ARV and how it will be a shared on the next project.

Adoney,

Good write up and that’s a plan for sure now you just need to take the next step. As far as your job you can get qualified with a W2 job with one full year W2 and currently employed year to date paystub. You need 2 full years of W2 income for a 'Part time" job so if your working security on the weekends if you have a W2 for 2022 and getting one for 2023 you can use that income as well.

FHA would be your go to program because it offers more wiggle room on its W2 income guide lines. FHA rates right now are lower than conventional but the MIP versus PMI can make a little bit of a difference. But not too much of a difference where it will break the bank or jack the payment above the other.

Having $13K is a good chunk of change I would advise seeking out a seller or property that will offer a seller credit. Seller credit can be asked up front to help pay for closing costs since $13K is right on the line once you get up into the $300K range. On a primary you can get up to 6% but not likely in this market 2-4% is common.

If you can find a 2-4 unit it will help since the banks/lender can use 75% of the current rents or common rents of the market to help qualify.  This can help get into a bigger loan size in most cases and ensure cash flow or you living 'Rent free".

Umbrella policy is an extra policy that offers additional coverage to protect you from not having sufficient coverage in case a claim comes against you due to injury. In most cases investors put their properties in an LLC to avoid legal actions against their own personal assets.

When you are not holding a property vested in your LLC it can open you up to a lawsuit and if you have assets you want to protect its wise to have an umbrella policy. Most home owner insurance policies only cover a certain amount of PP/PI but an umbrella can offer upwards of multimillion coverage and more than one property.

There is no real need to go out and get an umbrella policy if you are not trying to protect significant assets. The home owner’s covers a decent amount should there be a loss/injury its when there is a major injury/death where the policy coverage can be exhausted and the person comes after you and your assets to cover the rest based on awarded lawsuit.

Joe,

Learn as much as you can but you still need to wait 3 more years to be able to sign a contract or get a mortgage. You can do it under your Family's name and you can be listed on title but not on the mortgage until 18. Since you are young I would consider looking at a 2-4 Unit multifamily and find some responsible friends your age that have a job and can pay rent.

Having 2-3 people paying rent that pays your mortgage is a great way to break into the REI world and start with a cash flowing deal. Learn as much about renovations and cash out refinance so you can pinpoint the perfect projects to ensure you can take cash out on the new ARV.

Having $600K is a large chunk of change you only need 3.5% to 5% as a down payment avoid using your money use the bank for that purpose. You always want to stay cash fluid for any issues that might pop-up like repairs, vacancy, lost jobs, etc...

Yes, it can catch a lot of loan officers off guard at first but it can be done. It falls under the Blue Water Navy Vietnam Veterans Act. A Veterans Administration mortgage where a Veteran and non-Veteran co-borrower qualify for a mortgage together is called a joint VA loan.

But like I said to Denis some lenders do not offer this options due to guide lines or investor overlays. We offer it through TFSB but we are VA Direct and Fully Delegated.

Christopher,

Looks like you are in Los Angeles that is not an ideal location for sure when it comes to best bang for your buck and cash flow. A lot of my investors in Cali buy are finding great deals in Oregon, Ohio, Indiana, TN, FL & TX. Majority of these states offer a very comfortable price range and at a fraction of the cost compared to CA.

Depending on what you are looking to get into in terms or Single family, Condo, Townhome, 2-4 Unit Multifamily rentals. Many of these states above offer a good amount of inventory to ensure you find a great deal. Buying out of state may seem a little out of your comfort range but with the help of a good Real estate agent, Banker and team. You can easily find out how many other investors like those here on BP are making it work with little stress and a solid ROI.

To give you an idea you can buy a 2-4 unit in IN, OH, OR and TN ranging from $175K to $350K just depends on location.  There is a lot of gentrification going on in many of those states as well.  In Cali its almost impossible to be in that range plus the taxes are a fraction of the annual costs.

If you ever have any questions or want to talk REI or need advice feel free to reach out or message me I enjoy helping.

Denis,

Yes, but keep in mind some lenders have specific overlays and will not allow. Genrally a fully delegated bank with correct licensing can offer the approval. You can also recieve a loan committee exception as well if the VA loan is ran under the banks "portfolio" program. That just means the bank funds and services the loan but the DTI must have a reasonable blended ratio.

Hi Martina,

A few places come to mind based on your run down of what you are looking to accomplish. Have you ever been to or looked into North Conway, NH. Great location for STR for all year round bookings the White Mountains offers a unique location. Great for summer time camping, white water rafting, hiking, fishing multiple lakes, and ATV.

Winter comes around and you have WildCat, Bretton woods, Waterville, Loon, Pats peak all of these are ski/snow board, tubing mountains, Great shops in the town along with great food, bars and annual events. If you time it you can find a great deal as more people move out or family put their homes up for sale. You also have several people who retire and move south to get away from the snow.

Whitney,

You can avoid having to have a large savings if you buy outside of California.  The idea of buying out of state sounds a little scary at first but it's pretty simple.  Having a plan outlined and following the right steps in terms of financing and best programs is key.  First few properties can be geared towards turn key not much renovations needed to avoid GC/builder hassles.

You can also go for the TLC projects that only need minor rehab but still pass an inspection to work towards a higher ARV to pull out future equity/down payment funds. If you own a primary home its fairly easy to get cash out of it through a refinance or 2nd mtg for start up funds as well.

You can buy as an investment or Vacation home where Investment requires 15% down and Vacation requires 10%.  Vacation must be single family and not 2-4 units so if you can swing the 15% its worth it to get the extra doors.  States that are cost efficient to buy in right now are OR, TN, IN, OH, FL much more affordable than Cali.