All Forum Posts by: C L.

Nic, just one more note.

You mentioned "one time FHA qualification."

A borrower can get as many FHA loans as they want - just only one at a time. Even then, there are a few exceptions.

Not sure how you intended that statement.

I was trying to edit my answer when computer froze and had to reboot. Don't know why it came up like that.

With that much out-of-pocket, I know I wouldn't do that deal w/o having an option to extend the time to refi AND a fixed rate.

What's the prop worth?

It appears to be a smokin deal for you, but even aside from the licensing requirements, why would a buyer pay 10% interest only in this situation? Surely if they have 20k as a down payment, they could afford to pay p&i on a loan and would want to. I wonder if this is a deal you could sell.

I would rent before I would take that deal. That would be $44k out of pocket in 3 years and if I could not get a loan, then that would be $44k in rent - essentially. Those people sitting in the property would not be happy campers on the last day of the 36th month.

Make a deal win-win for everybody.

My thoughts.

For sure. In the climate we are in, there's no reason to turn down any qualified buyer who can get a mortgage.

I like your humor.

So true.......far too many details and ifs, ands and butts.

Kiddie Condo is actually nothing more than FHA with a non-occupying co-borrower on the loan.

In the case of student housing, typically, the non-occupying co-borrower is the parent of the child and the student needn't have much income (or any). Instead, qualification would be based on the parent's income. But the student would sign all docs and be on the deed and the loan. And the student must meet the credit score requirements.

What's very important to know about FHA is that there are all kinds of rules and guidelines put out by HUD. BUT, in the end, the lender's underwriter sets their approval guidelines and are often more stringent than HUD. I know of lenders who will not approve a transaction for a non-occupying co-borrower where that co-borrower is not related. Used to never be a big deal back in the day. Not so today. Lenders are wary.

In trying to find a lender, don't focus on asking about Kiddie Condo. Instead, you want a lender who will allow a non-occupying, unrelated co-borrower on an FHA loan.

Back in the day, FHA used to be a slight nightmare because of appraisal, inspection and repair requirements.

But all that has changed. FHA is no pretty much akin to conventional.

You asked is FHA would be too costly for a seller. Well, it could be costly to you if you decide you don't want FHA buyers. Today, FHA makes up about 30-35% of all new loans (even higher in some areas). So, if you want to throw away that many possible buyers, then so be it.

FHA requires a minimum down of only 3.5%. That will help you sell your property since more people can qualify. Sometimes FHA buyers want help toward closing costs, but so do conventional borrowers when it's a buyers market.

These days, smart, reasonable sellers will take a buyer who can qualify for a mortgage loan - regardless of the type. It's just that simple. Many cannot qualify. If they have cash, then it's not an issue at all.

This a standard clause with conventional/FHA mortgages when you buy or refi as a primary residence, Everybody has that clause. One of the many papers you signed at closing. The purpose is to prevent folks from buying a home as primary and immediately turning it into an investment property - or "investment" was the intention all along. The loan would have had vastly different terms if the lender knew it would be an investment prop.

That clause has to be there to protect the lender. But people often turn homes into rentals within the first 12 months because our lives can change. You just need to be prepared to prove it was not your "intention" when you bought/refinanced the home - if it ever comes up as an issue.

I know this thread is old as dirt but I'm commenting anyhow since we still see the old threads..

I recall years ago a dude who rented rooms and he ran into the biggest problem of his life when 2 of the tenants got into a fight and one fell down the steps and had serious injuries. It was a mess. The home was in Philadelphia which required that it be licensed as a boarding home with a city business license, a profits tax due, and on & on. He had done none of this.

His insurance was not set up properly, he was sued. It became a nightmare and he suffered severely.

Something like this scares me. Even if set up properly, that is a lot of strangers living together. And people will be people. We know that. Students, maybe, since they are used to living like this, but mature, weird, set-in-their-strange-ways adults, not a chance. Except maybe a big house that was designed for something like that - like different wings.

I was just sharing as another tool. I know Zillow can be awful for home values - usually is as I've seen over the years. No reason rents would be any different.

But still another tool to add to the arsenal. Nothing more. Once renters find out the values are on Zillow, they will be checking it, so it could behoove the investor to know what Zillow says - just to respond to the customer.

Use it if it helps, toss it if it doesn't.