All Forum Posts by: Stephanie P.

 Lots of good advice, but I would add this;

If you have 5 properties, do an analysis of the properties and sell one that will yield you the most cash.  Sit on it until there's a correction and then buy a better deal.

I think what everyone is missing is you just purchased your primary residence this past summer. Fannie Mae's rule is you have to move into the property within 60 days (I guess you have done that) AND wait a year before you can get another primary residence using Fannie/Freddie/FHA financing. To sign settlement papers saying you're going to move in and live in the property for a year and then not do exactly that could be construed as mortgage fraud. Look at your settlement papers. There should be a clause in there that defines what I just wrote. Unless there are extenuating circumstances (wasn't what we wanted isn't extenuating), you'll be precluded from getting conventional financing for your next primary residence.

People that use Fannie Mae and Freddie Mac for owner occupied financing get lower rates and increased loan to value's than they would for investment properties because the risk to the investor on an owner occupied property is less than investment properties.  Wait out the year.

Stephanie

 Taxes are the key.  If you are a travel nurse like some of our clients have been, they are paid 1099 and you need to have a track history of being self employed for 2 years before you'll qualify for conventional financing, even if you've been a nurse for 13 years, it's all about how you're being paid.  That's the case for bank statement loans as well (keep in mind these are generalizations and there may be a rogue bank statement product out there for self employed people with less than 2 years self employed, but I don't know about it).

DSCR loans work best in your situation and the more you can put down, the better the pricing. Rates are still in the 7's on a 30 year fixed (yes the points and fees are borrower paid and more than conventional). No self employed time constraints, no tax returns, no pay stubs and no profit and loss statements. The property has to have at least a .75 DSCR meaning the rent has to cover at least 75% of the total mortgage and you have to have decent credit; that's all. Find a good mortgage broker.

Hope that answers your question.

Stephanie

Many lenders will require a separate LLC, but that's kind of the least of your worries on this one. This is not a cookie cutter residential property. Try local local local banks first and then local credit unions. Either of them would be the least expensive and the most likely to finance this, but if they won't because you have no experience or myriad other reasons, know that MOST DSCR lenders won't touch it because it's mixed use. If it's rural, meaning a population center of less than 25,000 or not within 25 miles of a population center of 100,000, pass.

The few DSCR lenders that will touch it will be expensive. Do your numbers at 75% loan to value max (25% down) and use between 10.50% and 11.75% for a rate on a 30 year fixed. The appraisal will cost between $1500 and $3500. You'll have an environment study fee of around $1700, underwriting cost of about $2995 and a closing fee of around $600. Figure a broker will charge between 2 and 3 points in origination for this.

Don't want to frighten you, but I want you to know what you're getting into.

Stephanie

You're probably trying to be funny, but a lot more goes into it.  Cheap and quick don't equate to the most cash out or the highest ltv or the fastest draws or borderline rural or if the property is zoned correctly or the lender who's swamped because they're the cheapest guy in town and the list goes on and on.

The best loan for the borrower isn't always the cheapest or the fastest.  Sometimes it's neither.

Cheap things are seldom good and good things are seldom cheap.  That old saying goes for most things.

 This is the post of the day (I know it's early but...)

Every borrower's situation is different and it's vitally important that they are matched with the right lender.  That's why it's crucial to ask questions in the beginning.  I treat it like it's an interview to find the borrower's exit strategy, cash position, experience with both building and managing properties and other things.  

You can refinance a conventional loan into a DSCR loan. Rate and fees may be prohibitive in this rate environment, but if you're looking for cash out for another project and can't do a HELOC, then DSCR works.

Most DSCR loans are 30 year fixed. ARM's are making a comeback, but I haven't seen the rates on ARM's be low enough to entice most investors. Interest only is a good way to go, but still don't beat the 30 year for most investors.

By saying no to rezoning to a 3 unit they are saying the zoning only allows for a single family property.  

The attached garage is considered a "master suite" I'm assuming of the house and the detached efficiency is an in-law suite, meaning it's also part of the single family house. They want to keep the "units" to a single meter so they aren't allowing a multi-family property in that zoning.

With all that laid out, Section 8 will probably only allow it to be rented as one unit.  If you want to rent the detached garage and master suite out as additional units, you probably won't get Section 8 approval.  Not the end of the world, but not ideal either considering you'll be renting a single family property with one meter for the entire property to three separate entities.

 You can ask as part of the negotiation if it means that much to the transaction