All Forum Posts by: Jared Bouzek

Zach Kiser First of all, welcome to Bigger Pockets. Conventional lenders with the nice interest rates and terms will have due on sale clauses. If you want to purchase the property with an LLC you're going to need a commercial lender that will likely put you in an ARM with higher interest rates and shorter amortization. If you want the better lending terms offered through conventional financing, you might look into how important the LLC is to you.

@Nicholas Pelham-Clarke In your post, you didn't really state what your goals are. What is your motivation for selling everything in Denver and investing in another state? That will help answer some of your questions. Saying that Denver is "too expensive" is a bit generic because it really depends on what you are trying to accomplish. There are many people investing in Denver and the surrounding area who don't feel it is too expensive.

Welcome to Bigger Pockets, @Robert Krechter. If you have lurked for a while, you know how valuable of a resource BP is. What are the next few steps you are hoping to take in REI?

@Brian Nopper Welcome to Bigger Pockets. I live in Castle Rock as well and have a background in O&G as a drilling engineer. Sounds like you've already got some REI experience under your belt.

You are correct that the VA loan cannot be used for rental properties. You must occupy the property as your primary residence for a VA loan, so you would have to be willing to move into the property and then convert it into a rental down the road.

Good luck with your investing.

@Ryan De Jong Under Conventional guidelines you can cash out to 80% LTV single family and 75% LTV multifamily with OO financing. If NOO, max LTV is 75% for single family and 70% for multifamily.

@John Trujillo Welcome to Bigger Pockets and congrats on working your first deal. Give us the low-down when you get it closed!

To follow up on this, I did research this out with 3 of my lenders I work with consistently on investor deals. 2 of the 3 seemed to have no issues with the Nomad strategy but highly recommended you abide by my prior post of moving up in house with each acquisition. Long story short, you're not breaking any regulations or laws as long as you abide by the terms of your note and live there for at least a year. By moving up and describing in a letter to the underwriter what you're doing, you should be able to accomplish this as long as everything makes logical sense.

@Rick Munoz I don't necessarily want to derail this thread, but in response to @Chris Lopez on Option 1 which I would call a nomadic style of investing, my biggest concern becomes how an underwriter views this systematic pattern of changing your primary residence. I'm not going to be dogmatic on this subject because there really is not a black and white guideline to correspond with this to my knowledge and I have no issue with other loan officers chiming in on this to contradict me based on their experiences.

First of all, nomadic investing is used by a number of people. The official documentation of your mortgage will likely state that you intend to reside in your residence for 1 year from the time you close. There is no guideline that specifically limits the number of times you can repeat this process (aside from the 10 property conventional limit). An underwriter typically wants to see that you are "improving" in your living condition when you move from residence to residence. So you're accomplishing one of the following things: 

• The new home that you are moving to is nicer and thus more valuable so you are paying more to acquire it.
• You have outgrown your current residence due to getting married or having kids and are moving to get more space.
• You have a long commute and are moving closer to your place of employment.

These are not hard guidelines. These are simply factors an underwriter will look at when you are purchasing a new primary within a small geographic area. If you're moving a mile down the road from a $350k to another $350k house and retaining your current home, this can raise red flags to an underwriter. The logic is that you could be committing occupancy fraud and not really moving but stating you are moving to get owner-occupied interest rates. 

The way to avoid this is by what I listed up above - move up in value (~$50k), space (Rooms/Square footage), or otherwise be able to provide solid substantiation. This probably isn't an issue the first time you move and maybe not the second, but by the third time around in a small area over a short time period, you could get questions from an underwriter.

I'd be curious to hear @Chris Mason's thoughts on this subject if he has any experience with this.

@Steve Kirsch First of all, welcome to Bigger Pockets. 

Like many things involving investing, REI has trade-offs of risk vs reward. In relation to your question, higher leverage generally equates to better returns but more risk. Conventional financing is only going to allow a certain level of risk for the lender by controlling your LTV (Purchase 85% max for single family and 75% max for multifamily). Using leverage allows you to spread your dollars across more investments and minimize your capital input, maximizing your return on investment. There's also value in not putting all your eggs in one basket with a single property unless of course you're looking at something with a substantial number of units where that risk can be reduced.

Ultimately it comes down to your personality. If you're seeking cash flow on SFHs in the Denver area, you'll want to work on sourcing below market deals that you can do some light rehab on to improve your cash flow. You'll probably have some better luck with cash flow on multifamily if you can find them.

Good luck getting started. Let us know how we can help you.

@Rick Munoz Welcome to Bigger Pockets. You've taken a great first step to REI in finding this resource and all of the information BP has to offer. There are many experienced investors and professionals on this forum, so lean on their experience and ask lots of questions. Let me know if you have questions on anything finance related.

Thanks for the mention @Matt M.