Buy Investment Property Or HOuse For Family First?
I was wondering if I should buy an under $30,000 investment property for rental income or buy a HOuse for family. Which would be the best option concerning Debt-income ratio? The investment property i was considering is $15,000 ($65k ARV) and I wanted to do a cash-out refi and take $20,000 of equity out for capital. I know now is the time to buy, however If I choose to buy a residential house first this will also affect the debt ratio and I may not be able to qualify for investment properties.
Also, will an LLC keep my personal debt-income ratio seperate from my business?
Yeah that makes sense, thanks.
I have not run into a lender yet that would make a loan for less than $30K. If you are looking a property priced lower, chances are that you will have to pay cash anyway.
CommericalKing gave you good feedback.
You should also consider how long you plan to remain in a house. If the chances are that you will move in a year or two or three and will sell your property, I suggest you just keep renting. You will lose money by reselling your house so quickly. Even if you have a small profit on the resale, sales commissions will still put you in the negative.
BB&T is my primary bank. When I approached them about a small loan secured by real property, they told me that the cost of originating the loan was more than they would get in origination fees.
They offered me an unsecured personal loan for my needs in lieu of a residential mortgage loan.
Since the amount you need is just $15K, maybe this is a viable and cheaper route to financing for you too.
A mortgage broker originated two loans for us with Chase in 2008Q3 that were less than $50K. They were in an LLC and we did the DODI deal (Deed-out, deed-in) so they are still in the LLC. Lender had no problems or issues with this. Personal guarantees, stated income, verified assets, 65% LTV, C/O, serviced in-house with good terms. Well over 4 loans outstanding, and well over 10 too. We have done two loans (>>$50K) in the LLC in mid-2008Q4. No DODI. No issues. We plan to do more (at least two in the works) in 2009Q1 and have verbal lender approval.
So loans can be done, although underwriting is taking a lot longer and the terms right now are not that favorable because of short calls.
Good member/mgmt credit, lower LTV, solid REI history, and in-house servicing are the keys, IMO.
Try a small local bank or credit union which holds its own paper.
you can always do a private money mortgage. Mom & Pop lenders that fund mortgages rather than investing in CDs
Not all lenders have a 4 property limit. This changes all the time and we have financed up to 10 properties with one lender in the past.
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