How To Structure First Rental
Hi I am new to the forum and from what I see there is some fabulous advice.
I wish to move into the invest and hold property venue or REI, as luck would have it I have a relative retired poor credit needs a home for a year or two.
There are several small ranches for 65-80 K in the area and this seems like a great way to help a family member and launch my REI activities.
I could use some advice on how to structure this.
My credit is good Ficos in the 730-750 range,
I have over 100,000 in unsecured credit available, and owe around 12,000 plus a car.
DTI is good with a 5 year stable job.
My wife owns our current home so it’s conceivable that I can be an OO for at least 6 months to a year and we are not willing to tap the equity in it.
My objective is to obtain the property, with little or none down (like everyone else wants) and avoid PMI so that leaves me with a 80/20 or 80/15
I just am not sure if my current home becomes an issue, if I would be better off to use savings and unsecured credit to obtain but this leaves the same dilemma to finance after transfer.
Finding a good mortgage broker has turned out to be harder than I thought.
I would appreciate anyone’s thoughts on the right structure.
[ Edited by Ohioinvestor on Date 06/12/2004 ]
You will need exactly what you cant find. A good mortgage broker. Since your credit is is in the 700's you should not have any problems getting a 100% LTV and then either making payments ahead of time with your savings or setting up a down payment to get the interest rate down.
Depending on your savings account, you may want to look at smaller apartment complexes as the per unit price would be better than SFH's. This would also be easier to get a loan on, as it will be a higher amount. If you get a good mortgage broker you should only have to put down 10% or cross collateralize for no money down. You will have the expense of an appraisal though.
Good Luck,
Kyle
You can find good mortgage brokers. Just ask investors who they use. If you want I can point you to my MB (he works nationally). The local club in your area will have investors who can also suggest people.
For the most part the story will work. I am a little concerned about the no cash and unsecured debt. You need to me smart about how you manage your debt.
Renting to a relative is a problem if they do not perform. Are you going to evict? If not consider getting a rental that you rent to a complete stranger and just mailing the relative some cash every now and then.
John
[addsig]
Thank you for your advice; it does seem that a good broker is the ticket in many respects.
I can see the value in a small apartment complex, which I have not even considered but would like to explore as a vehicle.
As to the relative, yes I hear what you’re saying I would not evict and then I would be making the payments instead of her.
active_re_investor, I would appreciate the lead to your broker.
You mention that your concerned about unsecured debt of 12k would you suggest that I pay this off prior to applying?
How good are the rates on the unsecured lines v. the mortgage. if it's cheaper money, you might look at that although RE debt is better than revolving debt on you credit.
Quote:
On 2004-06-14 11:08, cjmazur wrote:
How good are the rates on the unsecured lines v. the mortgage. if it's cheaper money, you might look at that although RE debt is better than revolving debt on you credit.
The rates are 4% to 8.9%, but maxing up a CC is a sure fire way to tank a FICO score.
i would rather use in a short term scenario only or for repairs etc till a refi is completed.