I'm Ready!...one Concern!
Hello everyone this is my first post but I have been on this board soaking up all this information for months now. I have read and purchased several books and I am to the point where I am prepared to close my first deal.
Here is my situation:
Im 23
I have good credit (over 700 Fico)
I have about $8k to start out with
I have a partner (my brother) who is an electricain and hard worker. He is willing to invest some money and alot of his time.
Here are my questions and concerns:
We want to start out doing Sec. 8 rentals (the demand is very high here, and my brother has had experience with Sec.8 tenants before) Also, home prices are low in many areas and that will allow for positive ROI)
My questions and concerns starts here :-?
Financing: For rental properties all of the brokers I have talked to said 10%-20% downpayment ...which is way to much.
Can I used owner-occupied financing to get 5% even though Im not going to stay there?
Are there any concerns I should be aware of in doing this :-?
Thank you guys so much for all the great information :-D
If you have connections, you can buy rental property with 0% down. Since your brother has experience, maybe he knows somebody, or should co-sign. Makes a difference.
My husband and I purchase SFRs in the 30s and put down 5-6K. Not a lot out of pocket then. Your first rental deal is the hardest. Once you've established you're no dummy and can do this and make money on it, it's smooth sailing (mostly) from then on.
Best of luck!
No, you can't use owner-occupied financing, and not stay there. There's laws against that kinda thing. The main concern there would be going to jail IF you get caught, it's called fraud.
Greetings selsus,
As others have indicated, there are lenders that will do 95-100% NOO loans. BUT... the question is, whose doing them in the Virgin Islands.
You may want to start by going to the "Lenders" link on this site and call a few. If they don't do them, may they'll know someone who does.
I must say, you're in one of the most beautiful areas in the world. I've been bareboating down there about 12-15 times (mostly the BVIs) and I absolutely love it!
Anyway... Good luck.
Yeah mcole, the Virgin Islands is my home and a beautiful place. Im in Florida now and thats where Im going to start REI. I would never think about investing in the VI right now....the prices are very overvalued :-o But then again with the views I have seen, who can blame them
I’m thinking about changing strategies a bit., and would like to know what the pros have to say :-D PLEASE!!
Purchase a home under 25k (there are a few here, and they are pretty decent)
The cash will come from a credit card that will charge me (prime + 2.99) 8.24% for up to 20k
I can purchase a home as an all cash deal and should be able to pay less than asking.
Then I Fix the house to meet HUD standards and get it rented to a section 8 participant
Then within a month...take a home equity loan that will significantly lower my monthly payments and maximize the property's ROI
This looks good on paper but I just wanted to know if I was overlooking anything :-?
Thanks again
Sounds like a good plan, what part of Florida are you in?
Keep in mind, you aren't limited to section8 tenants. I actually prefer to have regular tenants versus section8, and I buy in low-moderate income areas.
GL
[addsig]
Thanks for the reply......Im in Northern FL right now and think I might stay here for a while. Im not just limited to Sec. 8 but think it's just one of the avenues I might use.
Thanks again
Selsus-
It's a good plan, I've considered purchasing properties with credit cards before (in fact, right now - I found one in a decent area for 13K in GA!!!!) and then fixing them up.
N. Florida - how far north? I am N. of Tampa but S. of Wildwood. One thing to keep in mind and other Floridians here will understand what I am talking about: insurance here is becoming a major pain! Even brand-new houses with poured foundations (but frame above) are hard to insure without turning to Citizens.
Florida is definitely booming and if you are looking to pick up homes that low - it will treat you very well. I have one I bought for 19K, fixed up, rented out for more than a year, and it appears it will sell for around 65K. And another for 35K that is under contract for the same (We chose to sell it to a great tenant - he is happy and we are happy!). Nearly doubled the money in a little over a year. So best of luck to you, it looks like you found a good area to start out in!
Oh, and we have never touched Section 8. I hear it is very good, and that the gov't keeps tabs on your property that way.But we have gotten great tenants without needing it.
I am a broker and with a 700% fico you can get 100% financing for full doc borrowers and should be able to get 95% with stated income.
One option to consider is having the seller carry a 2nd mortgage for the 10 or 20% down. Most seller's will not be interested, however if the house appraises for enough if may not be an issue. I'd be weary of financing too much of the downpayment via credit cards, as high revolving balences may push your credit down.
Once again, thanks for the great replies. Im in Jax by the way and prices in some areas are very distressed.
On the point of high balances affecting my credit score, the cards I will use for cash are hidden trade lines and dont report to my credit report :-D
What are 'hidden trade lines'?
The corporation I formed has corporate lines of credit Therefore they do not report to my personal credit file, although I am personally liable for the debt if the company can't pay its debt.
Hope this helps :-D