All Forum Posts by: Matt Vogt

I would  bet that those numbers more than work for your 200K goal mortgage. 

If you're upfront with your inquiry to a mortgage lender, they would work with you on their time in hopes of securing your business in the future. Just because you spend a few minutes with someone, you're not obligated to go with that business/person. I would still meet with a mortgage broker sooner rather than later to see what they are looking for... just preface it by stating that you're looking for rough numbers and aren't exactly in the market to buy in the next 30-90 days. 

Also keep in mind that your freelance business doesn't count as income unless you are paying taxes on it. The mortgage folks will only count income included on the prior 2 year's taxes.

First let's get the principle balance after putting 30% down: 

Principle Balance = (Purchase Price * .70)

Now let's get the interest payments (Years 0 - 3)

Monthly Interest Payment = Principle Balance * (.10/12)

At month 37, you begin making principle payments and interest payments to pay down the loan balance. Your inputs for this section of the loan would be as follows: 

Number of periods "N" = 24

Interest "I" = (.10/12)

From the sounds of it you would qualify for a loan to pay off your mothers house. With that, you could potentially use a home equity loan to get more money together for a 200K property. I would bet that you wouldn't have too much of an issue with that, especially with a large down payment. Worst case you're not approved for that much and you could simply make more gradual steps towards that 200K house. If you cant do it right now, maybe 12 months from now, maybe 24 months ... etc. The best way to get your answer would be to sit down with a mortgage lender and see what they propose. In fact, you should sit down with several lenders and see if any of them can work with you on this. 

Conceptually you will want a DTI of .45 or less (monthly debt/ monthly income), you'll want to keep raising your credit score, and you'll want as much cash down as possible. From the sounds of 50K down, you would have a 75% LTV, which is definitely good. Your credit is acceptable, however you'll end up with a higher interest rate than if you had an 800 credit score. You would probably want a 30 year note, as the monthly payments would be less (and therefore would lower your DTI).

If you're paying for the fence anyhow, why wouldn't you just put up your own fence on your own land? This would avoid any potential issues and would give you complete control over the fence. Seems pretty straight-forward to me.

If your mother-in-law doesn't need the debt, could you just pay the loan on her behalf? What are the circumstances, why does she want to surrender the property? 

@Greg White, 

Typically investment properties need to be purchased with 20 or 25% down for conventional financing. I've heard of 15% down, but that doesn't seem to be the norm. Due to this, you would likely not experience a situation where you do have PMI if the property is purchased from the get-go as an investment. If the property was purchased as your primary residence and you put say 5% down, then you would have PMI on a rental.

According to the IRS you can: "

Question:

Can you deduct private mortgage insurance (PMI) premiums on rental property? If so, which line item on Schedule E?

Answer: In general, you can deduct PMI premiums in the year paid. However,

if you prepay PMI premiums for more than one year in advance, for each

year of coverage you can deduct only the part of the PMI payment that

will apply to that year. Report a deduction for PMI premiums on line 9

of Schedule E (Form 1040) (.pdf), Supplemental Income and Loss."

https://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Sale-or-Trade-of-Business,-Depreciation,-Rentals/Rental-Expenses/Rental-Expenses-1

Pertaining to the original post, if you have PMI, you will obviously have less that 20% of equity in the property, which will play into your DTI ratio... potentially causing issues with subsequent conventional loans.

If you roll your extra cash flow back into the principle, you will be making large strides in paying off the mortgage prematurely. Ultimately, the sooner your property is paid off, the more it will cash flow. If you have ample reserves to protect against repairs, maintenance, Cash Flow issues, and capital expenses, maybe it would be a good idea to utilize your cash flow on paying down the principle balance. 

Alternatively, if the rate is very low, it might make more sense to stockpile the cash for your next investment. Do you have one property, 10 properties, are you saving from a day job to invest in the next property? It ultimately depends on what your goals are and how you'll be able to reach them. 

I like paying down the principle... it's safe, although slower growth will result.

Did the manager receive valid payment before the rent was "due" as specified in the lease agreement? If the money order was received on or before the due date, then the funds shouldn't be considered late. If they were received after the due date, then the funds should be considered late and any/all fees should apply. 

Although the fees seem VERY high to me, if the rent wasn't received on time I would argue that the fees are valid although unfair. 

As you already paid the fees, I would chalk this up as a learning lesson and avoid rental places that have unfair fees like this. Additionally, you may want to press the dishwasher issue, as they should be repairing it for you. The black mold is due to too much humidity... are you using the bathroom vent when taking hot/long showers? Is it a small room with poor ventilation? Consider opening the door when you shower to let all the mold-feeding steam to escape. If there isn't a vent, maybe suggest that there should be one. Also, keep the bathroom door open after the shower so that the steam can escape. 

I had issues with this as a kid... my sister was notorious for showering without the vent on to create a steam bath. My brother and I hard-wired the vent into the light, so that when the light came on, the vent would as well... Guess who didn't have mold issues afterwards.

@Luke F. 

I haven't research too much into the Fort Morgan market, however properties seem more than affordable and it's within a drive from Denver. The economy is small up there, and the big business is cattle / meat packing. I thought there was military up there as well. Anyhow, your investment to check it out is 240 miles of driving or so... might be worth the tank of fuel. I looked more at the Greeley, Ft. Collins, and Pueblo markets.

@Chris Billington, how about Greeley, Fort Collins, Colorado Springs, Pueblo, Ft. Morgan? I have seen potential deals that would have similar COC returns in those markets, and they are nearby. The potential for the I25 corridor to expand connecting Ft. Collins and Colorado Springs into a solid block is there. This market is definitely hot, but the surrounding markets don't seem to be quite as explosive yet. If I were to go to those markets, I would focus on the better parts of town and/or around the CSU campuses.