All Forum Posts by: Robert Bowles

I have had a vacation rental in Rhodi for about 7 years now.  It has been a great investment.  

Bought at auction and did the major remodel myself, self manage (my wife) and have a neighbor do the cleaning.  No big issues, and it has been cashflow positive since day one.....this month got a little scary but had someone rent the house for their lockdown, so full again.

We bought it for our use and planned to rent it on weekends to cover the bills. We tend to go out there less and less but have no plans of changing how it is run. I just bought a nearby lot a few months ago to build a new smaller home to add to the portfolio.

We have heard mixed feelings about Vacasa from other neighbors, so we decided to keep managing it ourselves.

Fell free to reach out with any direct questions.

Are you asking about the details of the program or the cost to repair?

The program allows you to wrap the cost to repair the property into the loan amount.  For a purchase, your loan amount is based on the lesser of the sales price + cost of renovation or as-completed value.

The repairs you elect to do (or finance) is really up to you. So your numbers will change according to what is being done.

It is a great product for BRRR.

Getting out of the FHA loan is a great idea. It would free you up to do another FHA loan and rates are not much higher from what they were when you originally purchased (assuming in the beginning of '18). MI should be lower (and ultimately go away) and interest rates should be close to what they were in early 2018.

I assume your HomeReady qualifications are income/locality issues.  Both HomeReady and HomePossible have areas that do not have income limits.  Portland areas are all over the place....Concordia Neighborhood $81,000 income limit, cross 42nd Ave into Cully and there is no income limit.  Use the property lookup tool to see if there is an area that fits into your investment plans.

Look for different lenders that allow all veterinarians to use their product.  Here is a quick text from TIAA from their lending guidelines. 

This product offers High LTV ARM options for purchase and rate/term refinance transactions on primary residence for the following actively practicing medical professionals:  Actively practicing medical doctors (including DOs), dentists, dental surgeons and veterinarians or the same who have chosen a researcher position in their field of study and are within 10 years of completing their original residency or fellowship, or  Newly licensed medical residents who are currently employed, in residency or fellowship, or  Newly licensed medical students who are about to begin their new employment/residency within 60 days of closing. Refer to Delayed Employment for details. If the applicant did not attend medical school, veterinarian school, or dental school, and does not have a degree in one of the aforementioned fields they are not eligible for this product. A copy of the applicant’s state issued acknowledgement, such as a current medical license or equivalent, is required to document eligibility to practice in the state of their current employment. In addition to the license or equivalent, if an applicant is a researcher, the verification of employment must support the position is utilizing the doctorate skills. Note: Post-graduation of medical school, new doctors are awarded a provisional medical license to complete their residency.

Sorry for the long reply, but there are always more options out there.  You may have to pivot a little.

Reach out to Shannon Todd (Southwest Missouri Realty).  He is their managing broker and has a great sense of where the market is going.  

HomeReady is usually the loan that works best for my clients. Most people automatically think FHA 203k. I have not done one of those in probably 2 years.

Most agents seem a little scared of them and the amount of extra work putting the loan together does not help......but if you are willing to jump through a few extra hoops they are great.

It really helps when EVERYONE is on the same page regarding the loan.  Then it is much easier.

I started investing house hacking back in '88 when I was 18 and moved up from there.   I bought the house a group of friends and I had been renting when it was put on the market as soon as I noticed that I could buy it and live rent-free.  Then I just kept adding rentals from there. It is a GREAT way to start investing.

@Kell Caro is right you should also make sure that your lender looks at HomePossible as well as HomeReady. HomeReady even makes it possible to use border income to qualify. The biggest benefit for both of these is MI drops off unlike FHA if it turns into a long-term hold. And the minimum down payment is 3% (single unit).

Have you considered a renovation loan for the project?  Fannie Mae's Homestyle will allow structural renovations to be paid when completed.  You can also build in other renovation costs into the loan to get the home habitable.

You can also look at FHA's 203k product, it too will cover structural repairs.

It sounds like you are running into an issue with intent to occupy clause (usually 60 days after close).  I have not run into issues with a borrower needing to be in the property before a loan being closed.  I assume there is something that the underwriter is seeing that causes them some concern.

Since you bring up the 6-month aspect.... if you are looking to finance only your purchase price and closing costs you should be able to do that if you own the property for less than 6 months.  In order to finance your purchase AND repairs (work completed up to that point), you will need to have owned the home for 6 months before you can use the new appraised value.   This is a Fannie and Freddie issue you may be running into.

I don't know what your brokers underwriting guidelines were that did not allow the financing, but I would assume it was around the mobile home.  I assume they were misinformed about the only 1 structure per lot.  They may be able to explain them to you.  

I did a quick look at some underwriting guidelines and here is where I see the issues.

Long drawn out painful too much information version -

The R2 zoning would not be a showstopper, but it is worth taking note and reading the appraisal carefully. As long as it's common for the area, not listed as illegal use, etc.. it would not be a big deal. However, it's critical to be aware that the appraisal will either make it a non-event or be the pre-show to a 3 ring circus event that includes rebuild letters from the City, variance/grandfathering, etc...

Mobile homes are considered personal property and as such are not eligible for a residential mortgage.

When a mobile home becomes a manufactured home, and that manufactured home has it's title from the DMV fully surrendered and fully converted into real property then at that point if:

• It is the ONLY unit on its own lot; and

• its permanently attached to a permanent foundation; and

• It meets all the normal manufactured home eligibility requirements 

Then - at that point, a manufactured home could be financed via one of the following correspondent options.

• Conventional Manufactured 80% LTV/HCLTV/CLTV
• FHA
• VA
• USDA Manufactured.

When a manufactured home has an accessory unit (mother in law, granny unit, guest house, etc...) the accessory unit will disqualify the manufactured home for financing.

When a manufactured home is the accessory unit it will disqualify the property (technically Fannie / Freddie will allow, but investors do not).

Very important -

Accessory units are ONLY allowed/accepted, when the property is officially a "single family" property. When a property is multi-family (2 or more units) accessory units are not allowed.

You might want to ask if you were to have a new appraisal done will they use that as the appraised value they are using in their guidelines.

I have removed PMI from about 5 loans and always went that route, usually after a few years...not 5. You will have to look at the cost of PMI vs cost of appraisal, but I bet it will save you in the end.

Emily Parker 

Berkshire Hathaway in Sandy.  She lives in Rhododendron so has a great knowledge of properties outside of town.

http://www.eparker.bhhsnw.com/

She helped me with my cabin and I have sent her a few referrals that always give great reviews.