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Old 03-08-2012, 01:07 PM
 
15 posts, read 73,339 times
Reputation: 15

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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.
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Old 03-08-2012, 08:04 PM
 
4,519 posts, read 8,182,154 times
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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.
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Old 03-08-2012, 09:04 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
29,035 posts, read 52,582,505 times
Reputation: 29934
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.
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Old 03-08-2012, 09:05 PM
 
Location: Texas
42,846 posts, read 51,266,482 times
Reputation: 68806
Seems to me you have a house loan...$300K!!!!????
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Old 03-09-2012, 05:24 PM
 
15 posts, read 73,339 times
Reputation: 15
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 View Post
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.
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Old 03-09-2012, 05:42 PM
 
15 posts, read 73,339 times
Reputation: 15
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 View Post
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.
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Old 03-09-2012, 05:45 PM
 
15 posts, read 73,339 times
Reputation: 15
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.



Quote:
Originally Posted by stan4 View Post
Seems to me you have a house loan...$300K!!!!????
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Old 03-09-2012, 06:00 PM
 
4,519 posts, read 8,182,154 times
Reputation: 6485
The details are all over the place. You need to sit down with a mortgage broker, go over your details with him and he will give you options.
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Old 03-09-2012, 09:08 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
29,035 posts, read 52,582,505 times
Reputation: 29934
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.
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Old 03-09-2012, 10:26 PM
 
Location: DFW - Coppell / Las Colinas
30,471 posts, read 35,525,378 times
Reputation: 36743
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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