Quick question on rentals and reserves

General Real Estate Investing
1

I’m in a pickle. I want to move - divorce - so I naturally want my own home.

I have a some cash now, and I was thinking I could use it to get a rental or two - or multiplex - now.

Then have the cash flow from the rentals to add to my 9-5 salary, and/or complimenting what I earn by wholesaling homes -

ie. I would replenish my down payment and closing costs with my rental cash flow and salary savings for my OO home (if i cannot use a program)

and/or add to my cash reserves for tenant repairs etc.

Do I have this right?

In order to get financing for a NOO, you need 4-6 months PITI in the bank (plus scores etc.) to qualify for a NOO loan.

Then, after you 've got a tenant, you can use the cash flow as income to qualify for another mortgage, whether OO or NOO

Is this correct?

2

When downpayment, etc. is a crunch, you can try with FHA…they will do a multi-unit up to 4 units if you owner-occupy one of the units…VA will also if you have that benefit…these are low-down payment programs.

Keith

3

lenders typically take 75% of your gross rent and figure that as income; of course on the other side of the balance sheet you will have a mortgage; thus a rental can either hurt or help your DTI.

finding rentals that are solid cash producers can be tricky. even good properties will have months where they consume cash so actually $$$ into your pocket can be a bit lumpy.

4

Thank you. I have the down and closing, but not the PITI reserves. Eitehr one, but not both yet.