All Forum Posts by: Zack Karp

@Michael Oliver You are signing personally as the landlord, and the LLC Manager is signing as the tenant. Which happens to be you.

@Michael Oliver creating a fake lease is mortgage fraud.  DO NOT do that.

But, here's the workaround. Create a LLC, and a separate bank account for the LLC. Rent the property to your LLC using a 1 year lease and an appropriate monthly rent amount. Then your LLC can "sublet" it to STR tenants. The STR tenants will pay your LLC into that bank account. Then just make sure you actually have the LLC pay you monthly rent from that account to match the lease amount. Do not skip any steps, and this solves your STR income issue.

Also, in order to use rental income to qualify for a VA loan, you need to document prior landlord experience. OR, you can hire a property manager prior to closing and that satisfies the landlord experience.

TYFYS and best of luck!

@Nat Love common misconception, you do not need 20% for a Conventional loan. First time homebuyers can do 3% down, and repeat buyers can do 5% down.

If you need any help mapping out your long term strategy, and how to get to properties 3,4,5+ most efficiently, feel free to reach out.

Best of luck!

@Nat Love get a heloc on your current house, 100%.  Even if you don't use it, it costs you nothing (or next to nothing).  But once you move out and it becomes an investment property, then getting a heloc becomes a challenge, and even if you can get one the terms will be worse.  Then if you need it for future investing, it's already in place.

I'm confused, you said you don't want to house hack, but you want to buy a new primary and keep your current property, that's exactly the definition of house hacking...

For your next house, it depends on your future goals and the numbers.  Do you want to just buy 1 more property, or are you looking to build a portfolio of properties?

If you ever want to buy a 2-4 unit property, you will want to save your FHA loan for that. You can buy a primary 1-unit property with 5% down with a Conventional loan, so if this next property is a 1-unit, that's the way to go.

Best of luck!

@Shawn Slaven you're talking to the wrong lenders.  You absolutely DO NOT need 2 years of tax returns showing rental income.

The only situation where you would need 2 years tax returns is for a new VA loan, and to be able to use rental income for additional properties that you own, and this does NOT include the property you are vacating. This is called a Conversion of Primary Residence (where you are going to keep your current primary residence and rent it out).

Either the loan officers that you are talking to either don't know the guidelines, or the lender has an overlay on the actual guidelines.

Feel free to reach out if you need help.

TYFYS and best of luck!

@Johanna Kerns that rate/cost combo seems a little high for a Conventional investment 4-unit for $880K with 25% down. That rate should come with no points. With a point the rate should be closer to 7.

@Chris Roberts

The short answer, no.

For using rental income on the property you already own and are vacating, you cannot use an appraisal for the amount of rental income, you would need to have a signed lease prior to closing, and you use 75% of the gross rent, which will wash against the mortgage payment. Proof of receipt of rental income and/or security deposit is NOT a Fannie Mae or Freddie Mac requirement, that is a lender overlay if they are asking for receipt of income/security deposit.

For using rental income on an investment property you are purchasing, that is where you can use the appraisal to determine market rent, which can be used in lieu of a lease for a vacant property (since you don't yet own the property, and can't control whether it's currently rented or not).

Hope that helps explain. Best of luck!

@Auguste Salom sadly ME is one of the states we are not licensed in, otherwise I would offer to help...

This is an easy fix. VA says that you need 1 year landlord experience in order to use rental income. OR, the use of a property manager. So the workaround is that you would need to sign a contract with a PM during your loan process, and then you can use rental income from the other legal unit(s) for qualifying. And if your lender won't let you do that, find another lender.

TYFYS and best of luck!

@Robert Boyde Jr. not sure how much your GF makes, but she might be eligible for a 5% down Conventional 2-4 unit using Home Possible.  That's what I would be coaching as the next step in your strategy, if she can qualify.  If her income is over the cap, then a SFD with 5% down.

Also (if I was coaching you), you should have used FHA before VA. There are some underwriting guidelines that makes the order in which you do these house hacking steps important.

I'd be happy to discuss further if you want to reach out, there's way too much variable info to explain it all here.  A lot of the optimal house hacking strategy is based on your income and goals, and is very much relative to each person's situation.

TYFYS, and best of luck!

@Ian Fisher if you can get the entire 90% at 8%, grab it.  That's really good in this market right now for a non-QM at 90%.  Just make sure there are no surprises, like points or insane fees, or a 3 year prepayment penalty.  Make sure you have an exit if you either become financeable for a standard jumbo loan, or if rates drop so you can refi.  Better to take a slightly higher rate with no PPP, imo.

Best of luck!