i bought my first 3 fam in february and i have fixed it up, evicted my inherited tennats, and established solid leases with new well screened tennats. i live in one of the units.
my goal is independence through rental income and equity. currently, the rent for the other 2 units pays my PITI. i have a 30 yr fixed FHA loan on the house.
i want to buy another fixer rental, but the mortgage broker says that it will be tough for me to get another loan any time soon since i am 23 with only 2 years steady employment and border-line high DTI ratios. my fico is over 770. here is my question: how can i get financing to buy my next property? what would you do if you were me?
TIA
I’d get a new mortgage broker.
Da Wiz
I agree with Da Wiz. I’m 24 myself and am getting ready to close on my first personal residence (same as you: Duplex, 1 apt rented out to pay PITI and I live in the other). I decided on REI during my house hunting process and started focusing my searches with a more investment minded approach. When I questioned to my agent how I would initally go about a loan if I wanted to purchase future properties she stated that many people take out multiple loans to be property. I personally would imagine that with a good credit score and the ability to pay back a loan a lender would accept your App. The only concern I would think they would have would be your amout of liabilty (ie: you lose a renter at a property you immediately have to pay 2 MTGS). My advice would be to go straight to the source and ask them. Contact some of the lenders you might want to work with in the future and ask them straight out. You don’t have to make a commitment on the spot but they can tell you then and there if you should even bother comming back to them in the future or if they can work something out. Just be careful not to stretch yourself too thin with a ton of loans…Good Luck.
With a 770 mortgage brokers should be tripping over themselves to loan you money to use as toilet paper. Ok, so that’s an exageration, but worse case you should qualify for a stated no-doc loan. You’ll pay a littler higher rate. That just means you may have to find a better deal to make it work.
thanks for the reply’s
i anticipated that a lender’s biggest risk would be a worst case senario where all of my units are vacant and i have to pay 2 mortgages.
how can i overcome this in the lender’s eyes?
where should i go for financing? fannie/freddie, primary lenders, savings banks, private lenders?
if you needed about 150k 95%+ financing to buy a 2fam, what exactly would you do next?
should i look to take over a sellers mortgage? or will that subject me to the same qualifying?
If you want to do that, then you should look into “subject to” or “sub2” investing. There’s a lot of material dedicated to it. It can be done but you need to do it correctly to protect yourself.