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Hello- I wanted to get some of your expert opinions at this, before I proceed.
I have about 310k in student loan debt. I have no other debt aside from about 5k in credit card on a 20k limit card, so 25% usage on the credit card. I have all of my student loans deferred until 2015 ( i need to renew it each year, but i am able to do this until 2015). My fico score is 795.
i own my own house that is registered in my own name ( recently bought in October a foreclosure for 20k cash).
I have an LLC, which I also own outright A- a single family house(rented), B- two duplexes ( total of 4 living units)( vacant- need some repairs), and C- 8-unit apartment building( fully rented), D- a small 1 bedroom house that needs extensive repair/rehab. All these properties are in the LLC name.
I am self employed. The apartment building is fully occupied bringing me about 3k rent a month- only bought this buillding last summer and rented since about september. One of the houses is rented for $550. The others are vacant because I recently bought them in the past 4 months, they need some work before I rent, but not too much.
I have no payments, I own my car outright, own my house outright. Own all the rental properties mentioned above outright.I am seeking a 4 unit building to buy, with the intention of living in 1 unit, and renting the other 3. It is almost like a condo, but still considered an apartment.
Should I seek a FHA backed loan, or conventional? Which is easier to qualify for - I am concerned about being self employed. My problem is that I am self employed, and in 2010 I traveled the world so I had zero income. I have not filed my tax for 2011 yet. I have never seeked a loan for a house before, i paid cash for everything. My only concern is if they go back 2 yrs for my taxes, they will see in 2010 I made no money (due to traveling 10 months of that year). I did not make that much in 2011 either, maybe only 30k, but I am wondering if I should file my taxes and show more. I will have to pay much more in taxes for money I did not make, but if that is something I HAVE to do to get a loan, I guess I will. In 2009, I made a pretty good amount of money so I am still riding off of that $ and investing it.
I like FHA bc it is low down payment. Are there also loans with similar interest rates that I can get with a low down payment? I do not want to put 20% down. The property I am looking it is around $350k range. It is 4 units, and each unit rents for $1050. So the new rental $$ will more than pay my mortgage. When I seek a loan, will they look at this income to figure out my percentages?
Any thoughts? What path should I take? I am looking to make this purchase in May. I dont keep much $ in the banks, but I just deposited 12k cash to sit in my checking to show that I have a history of $ in the bank to prove I can pay the mortgage if I were able to get one ( even though as i mentioned, the other units in the buildings will more than pay for my mortgage as well as my utilities as a matter of fact!- so I hope they will count that rental income from the new building I am seeking to buy when figuring my percentages.)
My credit is perfect, its just those damn student loans that are out of control. ( I failed out of a private healthcare school btw if anyone is wondering). Thank you.
You never mentioned how much money you will take home after all the bills are paid. The fact that it rents for $3k month is unimportant. What you take home after paying your bills is.
You may have to start paying yourself in order to get a loan. No one will give you a 350k loan with no income.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,585 posts, read 81,206,701 times
Reputation: 57821
Lenders no longer like to give loans to people that appear to be using student loan funds to buy property.
I have bought a hoe and refinanced while self employed, and even before the crisis, they will require 3 years of tax returns, look at how long you had the business(es) and will likely require the loan payment to be less than the usual 1/3 of income. Unless you are getting a 3 year mortgage, they will consider the student loan debt as an obligation
that reduces the payments you qualify for.
I have no debt pretty much aside from my student loans. ( Which, as I mentioned in my post, I don't pay a penny on my student loans)
When my properties are fixed and rented ( should be by May 2012), I will bring home 7k a month in rent, plus I make about 2k a month in ebay/online sales I do on the side.
Currently, as of today I make $3500 a month in rental income plus about $2k.
If I am able to buy the place I have in mind, it will add $3k more in rental income to total $10k monthly rental income, plus the 2k from online ebay stuff. If I get the place I want to get a loan on, I think the mortgage will be about $2k a month.
Quote:
Originally Posted by 399083453
You never mentioned how much money you will take home after all the bills are paid. The fact that it rents for $3k month is unimportant. What you take home after paying your bills is.
You may have to start paying yourself in order to get a loan. No one will give you a 350k loan with no income.
I haven't used a penny of student loans to buy any rental property. I failed out of dental school @ NYU. The cost of that is $90k/yr.( That was the average amount that most students took out per year, for four years) I failed out in yr #3. So that was about $270k from that, plus I had minimal 10-15 k from undergrad. With all the interest, I think its up to around $310k right now. Half are private loans with citibank, half are government loans. As mentioned in original post, All of these loans are in forbearance til 2015.
I have bought all my properties up until now with ebay sales profits.
My taxes show I made 100k in 2009. I show $0 for 2010( bc I traveled most of the year). For 2011 I have not filed, I am debated how much I should declare that I made if it makes a difference with this. I probably made about $55k in 2011, but I am considering marking down that I make more like 80-90k. I will have to write a bigger check when I do my taxes, but I guess it is worth it if I can get a mortgage. I guess I should check with the owner of the place, if they will finance me I can bring my credit FICO score over 800 by paying off one of my credit cards.
I have never paid a late bill in my life, and this 4 unit building will pay for the mortgage and leave me with minimum $500 a month, not to mention I will live in one unit for free. So even if the **** hits the fan, I would always be getting 3k a month from this building, and 3k a month from my apartment building. ( I also have 3 more rental houses, and 2 duplexes all of which are paid for in cash, no payments besides taxes on those places) No other payments I need to make, I own a $50k car outright with no loan.
If need be, to get a mortgage will they let me use my existing properties as collateral? I just dont see any downside of buying this building I am seeking, i will live for free in a 3 bed 2.5 bath condo type apartment. rents will pay for mortgage and taxes and leave me with $500 a month which will be used for my utilities etc.
Thank you all for your input and anyone else feel free to chime in. I have no experience with loans ( Except student loans LOL- those I knew nothing about and never in the world would I have thought I would fail out for failing one pharmacology class).
So anyone who has expereince, or infomation about getting an FHA backed loan as a self employed person with a strong list of assets but doesn't show huge income due to being self employed... ( if it were a year in the future, I would be showing $7000 a month rental income, but since I just bought most of these properties in the past 4 months, they arent producing yet and I am going on a trip to Dubai next week and will be gone for 3 weeks)
thanks
Quote:
Originally Posted by Hemlock140
Lenders no longer like to give loans to people that appear to be using student loan funds to buy property.
I have bought a hoe and refinanced while self employed, and even before the crisis, they will require 3 years of tax returns, look at how long you had the business(es) and will likely require the loan payment to be less than the usual 1/3 of income. Unless you are getting a 3 year mortgage, they will consider the student loan debt as an obligation
that reduces the payments you qualify for.
No house loan, failed attempt at being a dentist. Depressed me for many years, but now I am over it and moved on. I live in the midwest where living costs are low, soon I will have $10k a month in rental incomes, and I am 30 years old without a wife or any kids.
I forgot to mention in my original post, I have around $50k cash on hand. But I am conservative so I dont like to spread myself thin, I like to prepare for the worst and keep a large amount in reserves just in case.
I wouldnt want to put more than $20k down in any case I dont think.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,585 posts, read 81,206,701 times
Reputation: 57821
I still doubt that any lender would touch this. Whether your rentals have potential for $10,000/month income or not, that is not a job with steady income. Tenants come and go, lenders are well aware that there will be vacancies, maintenance costs and probably costly repairs like roof replacements. Same with the E-bay income, for that to he considered
there would have to be proof of that income over a significant period of years. Most E-Bay-ers don't report the income, and if it's not on your tax records they will not consider it.
Dude... you may have deferred those student loans but you need to do everything you can to eliminate. Get out of debt.
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