All Forum Posts by: Michael Doherty

Hi all,

I was hoping you could help me answer a few questions regarding FHA guidelines and how strict lenders interpretations are of them.

My current situation is that half my total compensation is commission based. Based of FHA guidelines you need to show at least 2 years of pay statements (I currently have 1 year).

After talking to 4 lenders, 2 said they could not approve me because of this rule. However, the other 2 lenders said they could approve me and take 1 years total comp including commission and divide that by 12 to get an average monthly number. The reason being that some lenders are more stringent in their interpretation of FHA guidelines.

Can anyone comment on this, and what I should make of this? Will I be pigeoned holed down the wrong path if I pursue with the lender that approved me, or is this normal practice? 

All comments would be appreciated, thanks!

Hi all,

I am looking to close a deal this year on my first MFH. In my analysis, what is a reasonable number to include when considering closing costs? I have heard mixed opinions and would love your input. I have already factored in PMI in my analysis, however the BP rental calculator says expect 1500-2000 for closing costs. Is this accurate if using an FHA loan?

I really appreciate the help. I suppose I am just a little nervous making such a large investment when I am constantly seeing RED in my cash on cash ROI. I'm going to look at a triplex tomorrow which actually cash flows while house hacking.

In addition, after talking to my lender and getting approved for an FHA loan- they require expenses not to exceed 85% of my income. As I eluded to before, no issue if I'm not living there, the challenge is meeting this stipulation while house hacking. I believe they run their numbers based off all units being rented and you not living there though.

Has anyone run into a similar situation, and can comment on this? 

Hi all,

I've been running a lot analysis reports from the rental calculator on BP and all my calculations show that I can never cash flow from a duplex (while house hacking). The average 3 BR Duplex is renting for about 600 per room for a total of 1800 per unit. My monthly expenses come in around 2300 per month. The only way for it to be a profit is if I didn't live there.

My question is: has anyone ever pulled the trigger on an investment property even though it initially didn't cash flow while living there? All the properties I've looked at would cash flow if I wasn't house hacking, however, I have no choice but to house hack.

My other question is: is it okay to go into an investment knowing you won't cash flow the first year, however, when you refinance and move out it will- so therefore you can justify the investment?

Thanks!

Yeah, all good points. I am currently in the process of purchasing my first MFH as well. I had the exact thought as you (what's next)? So after doing some research my plan is to purchase the first MFH with an FHA loan akin to you. Then have my gf purchase the next MFH or fixer upper with an FHA loan. The key is to do both separately as only one person can qualify for an FHA loan. So as long as you and your wife didn't get the loan jointly she will be able to qualify for the loan on your next purchase.

Quick question: when you analyzed the MFA you are currently living in, did you account for the entire rent you can get for the house as if you were not living there? Or did you only account for the actual income you would be receiving from the one unit?

Best,

Sure thing, when you connect with me I'll shoot you over the spread sheet I'm using. It's not perfect but I think it works for most properties.

I couldn't agree more. I currently live in a mtf with 3 other roommates. Our landlords with whom I spoke to are house hacking. Our total rent is 2200 and it covers the majority of there mortgage. However if you consider the amount of rent they would be paying anyways, it is a good investment. Ideally down the road they will be able to rent out both units for around 4000 total, which is a decent ROI.

When I calculate the ROI as if all units are being rented out without me living there it obviously goes up. I just wanted to make sure this is a fair assessment. If you don't mind, can I direct message you the spread sheet I'm using for my analysis with the numbers plugged in? I would love to know if I am on the right track or looking at this all wrong.

Best,

Hi all, when analyzing potential Multi-Family rental properties do people recommend including the total rental income even if I plan on living on one half? Or would you recommend only including the actual rental income in which you plan on receiving. I've heard mixed opinions. 

Ex. Both units would rent out for 2400 however because I would live on one side I only calculate for 1200 when analyzing if it would be a good investment?

Thanks!

Thanks for the advice guys, I was hesitant on looking at a 4 plex because it's my first time being a landlord. I assumed it would be easier to start off with just a 2-3 family home but it may be worth giving it a shot if I can increase my chances of getting a loan.