Hello. My husband and I are relatively new to REI. I used to sell real estate . . . about to return to the biz . . . and we own 4 rental properties (including one duplex) . . . all earning just slightly more in rent than the mortgages. We consider ourselves new b/c we have never flipped (would love to do that) and we’ve always used conventional financing (no HMLs, no private money). So we don’t know all the ins and outs, but we have some experience.
Anyway, at the moment, we are trying to do two things, one more important than the other. We are trying to buy an OO home for ourselves (long story, but we moved out of state, rented our home, returned . . . now renting short term from family, NEED place to live!
We are also considering another property we found for a flip (incredible edible edible deal . . . I think if the bank will deal could be an incredible deal, has been sitting, cash only b/c no cabinets, toilets, etc).
So . . . we get preapproved for the OO . . . get a deal on a bank foreclosure (both are incredible deals in my hometown I know the prices around here from selling and living . . . even in this market they are just unbelievable and realtor screwed up one of hte listings which is why I think we are able to get the deal).
Anyway, we have excellent credit, but need stated income/stated assets(self employed). So my questions:
(1) on the OO . . . one mortgage broker has told us that we can’t get another mortgage, no way, no how, b/c we have four properties that are financed. CW representative has told us that we can get the mortgage, no problem, because it will be OO and the four property rule only applies to investment and second homes. Which is true?? Are we going to lose this house? Or are we okay b/c it will be OO?
(2) on the second home (potential flip/investment) . . . can anyone give me a primer on pros/cons of HML? And how can we find a private money lender? And what’s the difference? We would hope to flip in a few months, but need money for renovations. I just read a horror story thread about getting reimbursed for renovations from a HML. . . . is that usually a problem? And I guess refinancing (should we choose to buy and hold/rent) is out of the question given this new four property rule, right? Can we form an LLC and tranfer these rentals w/o any money in the LLC BUT with history of rental payments?? We are just trying to figure a way around this four property rule.
Sorry to be so long-winded. Would appreciate any advice . . . question one much more important than question two. Thanks!!! :help