All Forum Posts by: Jerry Padilla

@Iftear Naser

Here is an explanation of the self sufficiency rule;

The maximum mortgage amount for 3-4 unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status. This is also taking into consideration, a 25% vacancy factor.

You can not partner up on an FHA with an individual not living in the property for a multi-family. You can have an occupying co-borrower that is also living in the property.

FHA does not take into the tenants income. You can count 75% of the rental income from the other units towards your DTI's.

@Benjamin Lemieux

For conventional you will be required to put down at least 15% on a single family and 25% down on a multi-family. 

@Mark Roy

Your best bet would be to purchase as a second home, since you won’t be there a majority of the time. A single family is 10% down with conventional. 

@Iftear Naser 

FHA can be a good option in higher priced areas for a single family or a duplex. For 3-4 units, they must meet the self sufficiency rule, which makes it difficult with high mortgage payments to meet this ratio.

@Eric Telese

Are you planning to occupy the property? 

If not you will have to get investor financing - more than just 5% down. 

Is the property in livable condition to qualify for traditional financing? If so I would purchase with conventional 20% down to avoid paying mortgage insurance and use your cash for the renovations. At 6 months you can cash out refinance at get your money back out. 

I wouldn't stretch your money too thin and purchase without having the money to renovate. A HELOC is difficult to find on an investment property.

@Quinton Bogle

You can cash out refinance in an LLC. The rates will be higher than conventional, and they have higher loan minimum amounts typically from what I have seen.

Personally, I have an umbrella policy and conventional mortgages in my personal name. 

@Sam Bromano

You will pay closing costs every time you get a new mortgage or refinance. 

You can pay cash for the properties initially, to save on expenses and only get the end mortgage. That is about as much as you can save when doing two closings.

@Account Closed

You are going to want to be in the freelancer job for 2 years to qualify. You also will need to show enough income to support the payments on the mortgage. This is for conventional. There are portfolio products that go strictly based on the cash flow of the properties, but your rate is going to be higher than conventional.

@Paul I.

You can purchase these with conventional residential financing. They would be 2 separate purchases with their own mortgages. You would get pre-approved to purchase both properties. An investor friendly lender can help clients purchase multiple deals at one time. They will look at recently sold comparable properties in the area. 

@Dustin Mustach

I would look at recent comparable condos that sold in your development to determine that answer. Did you pay under market, at market value? Are the recently sold properties at the price point that you purchased at or higher? If they are the same as what you paid, I wouldn’t improve. If they have sold at higher price points and have upgrades that you don’t have, then I would consider making improvements.