Newbie question

Financing, Hard Money Lenders, Private Money
1

Hi guys,

First post here, great site! I wish I had found it about $500 bucks ago before I paid for a silly seminar, oh well…

My question is this:

I found a duplex in my area for $69900, it is rented for $800 a month, with good long term tenants. Using my rough numbers, it should cash flow between $150-200 a month if I can get 100% financing. I am concerned about doing this though, because my wife and I are in the process of buying our first home. Right now my FICO is about 660, because of debt to income ratio, I was wondering how buying this duplex would effect financing for my residence, or the other way around, buying my home first?

I am negotiating price and terms now, but these are the current numbers.

Thanks for any assistance,
Tony

2

Forget about 100% financing for NOO properties in todays market. With a 660 FICO you may be able to get 90% depending on documentation, months of reserves, etc… Hope this helps.

3

Hi Christopher,

Thanks for the response, that’s what I’ve been told, so I’m trying to work out the terms which may include partial owner financing, or using a line of credit that I already have. I should have mentioned that in my first post.

Do you have any input on how this would effect getting financing for my home loan?

Thanks

4

This will absolutely have an effect on the purchase ofyour primary residence because it will have to be added to your debt to income ratio calculations. The main problem will be that most lender will only use 75% of the rental income towards your personal income. So in your case the lender will only allow you to use $600.00 of the $800.00 towards your personal income. Meaning it looks as if you will have negative operating income on the investment property which will affect your personal income in a negative way. The other thing is since you are a first time home buyer? You may have problems getting a loan for an investment property when you don’t already own your primary residence. You should close on your primary residence before beginning the process of purchasing the investment property.

5

I appreciate the responses, I wasn’t sure how that worked as far as extra income and all. I was thinking the same thing, that I should close on a primary residence first, the thing is, I haven’t found that one yet, I have found an investment that I want, haha. I guess that is more of the delayed gratification thing, don’t force the deal right? Thanks a lot for the advice, I think I’ll heed it and take it slow.

Tony