All Forum Posts by: Nicole A.

If you are okay with a bankruptcy, and they meet your income and credit score requirements, it could be worth a look. But do not feel obligated to approve them just because they basically wanted to know an unofficial acceptance before paying for the check. If it comes back and is not acceptable, they will just have to deal with that. 

Also, how often are they moving? If they move every year or so, that's not usually the best sign. And don't rely on their current landlord's word. That person could just be saying good things about the tenant to get rid of them and make them your problem.

How do you know their credit score if you haven't done a check yet, by the way?

You might want to consider a higher security deposit (check your local rental laws to ensure you stay within the max allowed security deposit).

You may need to aggressively shop around. For my first BRRR, my usual lender told me multiple times that they could do a cash-out refi at 6 months and 75% of the appraised value. Somehow, when the time came closer, suddenly all the details changed to much less attractive terms. I shopped around a lot. Several lenders wanted a full year. But I did end up finding a lender who did 80% of my appraised value with only 90 day seasoning. Apparently this option had just become available at the time. I am searching for another BRRR deal and hope they are still offering this...I should probably reach out to them just to renew our connection.

While it worked out well in the end for me, wow, there were so many "hoops of fire" to jump before figuring out my best route!

Why do you have to worry about this if you have a PM?
If the tenant broke the lease, then you should be keeping the security deposit (unless perhaps the unit is rented out *very* soon resulting in little or no loss of income). Ensure that your PM gives you the security deposit. Regarding the cleaning fee, that will likely come out of the deposit first. So the tenant might owe money, and again, the PM should be the one to contact them. But if it's a small amount, I wouldn't be surprised if the tenants pay it nor anyone finds it worthwhile to chase after.

This isn't Reddit. I understand you didn't create this thread, but can we all just drop this flamewar?

@Nicholas Sinclair Your last question has essentially already been answered. But if you need further clarity, it is something most bankers would be happy to explain to you (or you can Google it). When you do not intend to live in the house you purchase, you will have to apply for a non-owner occupied mortgage. That is the over-arching general term for it.

If you are looking to buy a house that you *will* live in, you will be looking for an owner-occuiped mortgage. These types offer lower interest rates and lower down payment requirements. If you buy a house to live in yourself but also rent out part of the house such as the basement or other bedrooms, that is called house-hacking. I suggest you research that term.

If you plan to house-hack, you still need to be able to afford the mortgage on your own if you were to have no housemates/tenants living with you.

Most tenants will not be happy with such a situation and it'll cause a lot of headaches for you. I would highly recommend that you give them notice to vacate and then do the renovations once the place is empty. I know it's unfortunate this could cost you more time/HM interest, but hopefully you factored this in since you knew the place(s) needed work and were occupied.

I would suggest giving them their proper notice to vacate asap, but also consider offering them cash for keys if they move out even sooner. 

Okay, yes, you will need 20-25% down. And don't forget closing costs which is roughly 5% of the purchase price, but you could try to negoitate the seller to pay some or all of this. Interest rates tend to be higher on non-owner occupied loans. So shop around. Go into smaller local banks and talk to them.

Also, start researching your area's rental laws and requirements. Many times, there are extra requirements (even on top of a normal rental property) to make it a legal rooming house.

When you buy a non-owner occupied house (a rental), you typically need 20-25% down. Your title suggests you want to house hack though so this is a little confusing what you're asking. Perhaps you mean you want to make it a rooming house where different tenants rent each room?

To add, you can typically get up to a 4-unit with a primary residence loan. However, some lenders choose not to allow this. So you will need to shop around.

To be clear, people can give you general advice on this topic. But people can not offer specific companies/services/etc. That is to be posted only in the Marketplace.

But to answer your question, I'm not sure why you're having a hard time finding low-downpayment options for primary residence loans. You can Google most big (and local) banks and see their mortgage details online. You should be able to find something that offers 3%-5% down. Remember this does not include closing costs though.