All Forum Posts by: Tommy F.

@Micah Weiss  Your questions may be answered in this BP blog post  Why the Vast Majority of Investors Should Stay Far, Far Away From D-Class Properties by Andrew Syrios

@Micah Weiss You get what you pay for. @Chris Mason makes valid point about low-end properties.  It can be done and you can cash flow, but is it worth the headache?  Some people make bank on these properties and they have the time and skill to deal with lower end tenants.  It's not for me. Look outside Tampa / St. Pete and look for something that can yield .8 to 1% rent to value, plus something with neighborhood staying power or upside potential for appreciation.  Good luck.

@Alexander Serrano Your first owner-occupied mortgage will be underwritten, in part, by using your W2 or 1099 income, debt-to-income ratio, credit score, and down payment. An FHA mortgage can be as low as 3.5% down plus closing costs. If your down payment is less than 20%, you will pay PMI and it can be up to 1% of the mortgage balance. Example, you get a $100k house, put down 3,500 and pay closing costs out-of-pocket, you'll finance $96,500. The first year PMI could be $965 or $80.41 per month. Let's say after a year you move and keep the house, but plan to buy another house. The second mortgage (new house) will be underwritten with the same FHA guidelines as your first, however, your debt-to-income has changed and the mortgage on the first house may be a drag because you can't count the income until you're seasoned. Fast-forward to a third house, you're seasoned, and you need another mortgage. Being seasoned allows you to count the rental income, but lenders will be looking for cash reserves or marketable securities as part of your net worth. Cash is king and not having liquidity can cause you and your lenders a problem if you get in a pinch with vacancies, unexpected expensive repairs, etc. All this is generally speaking and from my own experiences. Anything is possible, seek alternate solutions when possible. Back to the PMI, you can always go back to the lender with an appraisal showing the value has changed and therefore changed your equity position, especially on a fixer-upper that you bring up to a better standard.

@Alexander Serrano Forgot to mention, generally lenders will also be looking for six months reserves in the form of cash or marketable securities, 401k balances included, to cover your income property mortgages.  Yes, there are all kinds of ways to do this, but going the conventional lending route will put you in box to comply with lending requirements.  

@Alexander Serrano There is no technical waiting period for buying houses using conventional loans or other sources. You can get an investor mortgage anytime assuming you qualify or find a no or low money down seller finance. I submit to you that most first time "buy and hold" investors will use a bank and then strive to get a total of 10 government backed loans. If your first home is owner-occupied and you want to eventually turn it into a rental, that's fine. Just go into the mortgage knowing a lender is underwriting based on your commitment to be owner-occupied for at least a year. After a year, you can conceivably move-out of that house and buy another house for owner-occupied. However, your second owner-occupied home loan underwriting will not likely factor in the rent on the first house for at least two years. Lenders will verify your landlord experience by reviewing your tax returns Form 1040 Schedule E. Once you become a seasoned landlord, by all means, use that verifiable rental income to combine with W2 or 1099 income for qualifying on another loan. If your strategy is to use low down payment, owner-occupied, conventional loans to stair-step into owning multiple properties, just know that Private Mortgage Insurance (PMI) will likely be an added expense until you have 20% equity.

@Eric Oszczypala https://www.youtube.com/watch?v=yu3ov27D928

@Adonte Lipsconb It all depends. Your question without details leaves a lot to the imagination so I'll respond based on assumptions. I assume you will get a conventional loan to finance the Florida house and as such you will be required by the lender to attest to your intention to live in the house for at least a year. Lender treat an owner-occupied loan much different than an investor loan, the mortgage rates will differ, the down payments will differ, and other underwriting criteria may differ. You already know you're moving to North Carolina in six months to a year so you could be setting-up yourself to be dishonest with the lender. What will determine the timing of your move? Moreover, what will be your housing arrangements in NC? Own or rent? If you intend to buy another house in NC you will very likely NOT be able to factor into your income the rent from the Florida house. Most lenders want to see a seasoned landlord (two years experience) before they consider the rent as steady income for underwriting a new loan. Next, what may be a good deal for an owner-occupied in Florida may not be good as an income property. You will have to do the math and the math will tell you what to do.  Good luck!

Eric Oszczypala Go to Youtube! Search popcorn ceiling removal. There is a guy with a shop vac and a putty knife duct taped to the shop vac handle. Looks great. Sorry, I don't have the link. Should be easy to find.

@William S. @ I haven't seen how much you're investing to "hopefully" get a $1200 per year return, sorry I may have overlooked it. Anyway, I did read B+ neighborhood, good schools, low turn-over. Ok, let's estimate $100k house for conversation, $20k down plus repair costs, say $25k total cash invested. $12k/$25k is a mere 4.8%. Your amortized equity on a 30yr $80k loan will only be about $130 avg per month for first 60 months. No thanks. 

As for the condo suggestion, read the HOA covenants before your get in there. Many condo HOAs have a limit on investor-owned units. If you don't know what the cap is or if renting is allowed, you may purchase and get stuck with a non-performing property. The owner-occupied units run the HOA and they usually get their way - it is what it is, just sayin' Good luck.

@Lisa Renee Check-out Navy Federal Credit Union (open to all DoD). You could get a personal loan based on credit worthiness with repayment term anywhere from 3 to 15 yrs, but the APR will likely be over 10% especially for longer terms. If you have a Thrift Savings Plan, you can take out a TSP loan for 60 months and the interest rate is based on the G Fund's rate of around 2.5% +/- give or take a few basis points. If plan to separate from the military before the term of a TSP loan expires, then don't do it because the remaining balance due may be treated as a taxable disbursement, plus incur an early distribution penalty.