All Forum Posts by: Michael Cohen

Originally posted by @James Barnes:

Originally posted by @Malcolm Lawson:

Hey Dantuna,

I am a vet and now a MD Realtor. Yea, there are not too many multi units to invest in here in MD but you do see them occasionally. There are plenty of single families to invest in though. An option you might want to look into is purchasing a primary residence then moving out and turning it into a rental. With the VA loan, you have a maximum cap for your loan and this is determined by the county you are purchasing in. For example, Anne Arundel County MD is $500K. So what this means is you could purchase a home for $250K then move out and rent it then purchase a second home for $250K. The property just needs to be your primary residence at the time of purchase. Only real tricky part is your lender usually won't give you your second loan unless you have had a tenant paying you rent for at least 3 months.

The biggest advantage to going this route though is you can make these purchases with $0 down and get a great interest rate of probably around 4%.  A typical loan for an investment property is around 7% - 8%

What area in MD Maryland do you live in?

Aren't you only allowed to have one VA loan out at a time? Seems to be the consensus around my workplace...

You can have multiple VA loans at a time.

The VA benefit (insurance against foreclosure, allowing 100% financing) is only up to $424,100 however*. So if you already own a home that cost $200,000, then you have $242,100 left in benefit. If you wanted to purchase more than the remaining benefit, your down payment would be 25% of the difference between the sales price and remaining benefit.  So if the home you were looking at had a sales price of $300,000, then your down payment would be 25% of $57,900, or $14,475.

*NOTE: some, if not many, markets are high-balance markets and the benefit goes above this number. In Baltimore County, however, the total VA benefit goes up to $517,500.

http://www.military.com/money/va-loans/home-purcha...

In that case, you’re looking at a full 203k, which requires a 203K Consultant. S/he will Be your GC and manage all that for you. You won’t be too involved, other than selecting the consultant and primary contractor.

HUD determines the guidelines for how the income is qualified, so any lender who underwrites FHA loans must adhere to that methodology. Your DTI is based on the cost of homeownership of the property, including: 1) principal & interest 2) property taxes 3) hazard/homeowners ins. 4) mortgage ins. 5) secondary/other financing 6) condo/HOA fees On a multiunit property, you can use 70% if the rental income from the other units, assuming you don’t have a 2+ year history of rental income on your tax returns. The rental amount is determined by either a signed lease, or rental value as determined by an appraiser.

Sorry, 2, 3, and 4

On an FHA loan, 70% of the rental income from units 2, e and 4 would count as qualifying income.

Absolutely not! I would also report him/her to the local board of realtors!

My apologies; I missed that!!

Originally posted by @Wayne Brooks:

There are no 3-5% down conventional loans for a duplex, only an owner occupied single family home.  I think it's 15% down minimum on a duplex, but you can google it up......Fannie Mae loans.

FHA allows 3.5% down for a 1-4 unit provided it is owner-occupied.

You are somewhat correct; lenders (or a department within the company) who specialize in renovation loans don't act as your GC, but they will ensure bids are reasonable, release funds when inspections and milestones are met, etc.  

They will not inspect the job, screen contractors, etc. On a full 203K, that is the role of the FHA consultant. On a streamline 203K, that is the role of the homeowner, or general contractor if one is hired by the GC. Regardless of the loan type, all contractors will be required to be licensed and insured.

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What type of work are you looking to get done?  Something simple like new cabinets, or a huge job like a full rehab?

Everyone here is correct; you absolutely CAN collect rent from units 2, 3, and 4. 1-4 unit properties are considered "residential" and therefore qualify for an FHA loan. On top of that, incoming rent from the other three units (on a 4-unit property) would count as qualifying income. Only 70% of it, anyhow - assuming you don't have a 2-year history of collecting rent. The remaining 30% is to account for maintenance, fees, marketing, vacancy, etc.