U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 12-24-2008, 10:15 AM
 
93 posts, read 232,683 times
Reputation: 27

Advertisements

hey all, a little background... my mom passed away in 2001 and left me a small life insurance policy which i used to purchase this home. i'm a 21 yr old college student majoring in music (production/recording). i've been in a band (drummer) since i was 12... also play guitar, bass and keyboards. for the past 4 years, i've been interning (no pay) at a professional recording studio. this property consists of a 4 bedroom house, 2 bedroom cottage, 2 car detached garage, is zoned village commercial, its' tax accessed value is 200,000 and i paid 75,000 cash/ourtright, to settle an estate.

the property is in fair condition and has a continuing certificate of occupancy... if i wanted to, i could move in tomorrow. my friends and family are going to help spruce up the house and cottage before i/we move in... sanding/refinishing hardwood floors, painting interior, overall scouring/cleaning, etc. the elderly woman who owned/lived in the house probably hadn't done any updating (with the exception of a new furnace) since the 1970's. homes on this street and/or in this area are selling for 275-399. i am looking to get a loan for 100k, so i can bring this house into 2008. i do not have a job... been focusing on my education, traveling with my band and "dj"ing when i can. whatever $ i have made has been cash in hand... starving artist thing.

my plan for this property is to rent out the small commercial studio/suite, take on 2 renters to share the 4 bedroom house with me and rent out the 2 bedroom cottage, to the rear of the property (total rent 3,000/mo). i have (all) renters ready and waiting, looking to sign contracts... my problem is the bank, i've spoken with, will not take into consideration the rental $ as income for 2 years. being that i have 100% equity in a property that is TAX ACCESSED @ 200K and i only paid 75K for it, where can i go to get the funding i need to update/upgrade this house, which will further increase its' market value. I DO NOT PLAN TO SELL THIS HOUSE ANYTIME IN THE NEAR FUTURE... my long term plan is to faze out the commercial studio rental as well as the roommates when finances permit. the cottage will always remain a rental. the commercial suite will eventually be turned into my professional recording studios... this is the only reason i purchased this property. i fully intend to marry and raise a family in this house... it couldn't have been designed any more perfectly for me... small/quite rural town, post office right next door, firehouse directly accross the street, school 10 doors down, live and work in the same building, etc.

i tried lending tree and did get 5 hits immediately, however the 1st savings and loan warned me the rentals would not be taken into consideration (as income) for 2 years and added the "mixed use" zoning would be a problem as well. he suggested a product potfolio or hard money loan. do i have any other options, or am i at a stand still? could i go it alone, without the loan?... i think so, but i'd rather not wait for 2 years to be considered for a loan. oh, forgot to mention, i get 1400/mo. from my late grandmothers estate. being that i am a fulltime student and this money has been used for my education, it has not been declared as income. at this point i have approximately 1 semester to go to receive my associates degree and that is all i plan to pursue, as far as my formal education goes.

sorry for being so long winded, just wanted to hit on everything so you all know where i'm coming from. hope everyone has a nice and safe holiday season. thanks, looking forward to your replies.

Last edited by bruno_rs; 12-24-2008 at 10:25 AM..
Reply With Quote Quick reply to this message

 
Old 12-24-2008, 10:22 AM
 
Location: Savannah GA/Lk Hopatcong NJ
13,106 posts, read 24,883,519 times
Reputation: 11146
You may get more answers over in the mortgage forum as to what options you may have
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 10:28 AM
 
93 posts, read 232,683 times
Reputation: 27
Quote:
Originally Posted by njkate View Post
You may get more answers over in the mortgage forum as to what options you may have
hey njkate, thanks for the quick reply and suggestion... just stumbled onto this site, didn't know about the mortgage forum. hope you have a nice holiday.
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 10:39 AM
 
Location: Savannah GA/Lk Hopatcong NJ
13,106 posts, read 24,883,519 times
Reputation: 11146
Quote:
Originally Posted by bruno_rs View Post
hey njkate, thanks for the quick reply and suggestion... just stumbled onto this site, didn't know about the mortgage forum. hope you have a nice holiday.

Well welcome to the forum, you may not get many responses for the next two days because of the holidays

Hope you have a nice holiday as well and good luck
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 11:20 AM
 
Location: Plano, Texas
1,676 posts, read 6,467,801 times
Reputation: 686
Without a job, or income, you will not be able to qualify for a equity loan on this property. And the rental income will not be allowed by the lender either. You can look into a hard money loan, but the rate would be extremely high, costs would be expensive and the loan amount would probably be too small.

Do you have anyone that would co sign the loan with you? If you do, you might be able to do a fha cashout.
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 11:36 AM
 
28,441 posts, read 71,029,142 times
Reputation: 18396
Insufficient income == no loan. The days of "liar's loans" are mostly gone -- and that is a good thing. These days the lenders WILL go over your income taxes and carefully analyze ALL assets you claim to have and if they are not comfortable they do not lend.

You are an awfully big risk. The "equity" that is in the property is nice, but there are a lot more important things in the current environment LIKE CASH FLOW. You might have been better off NOT sinking ALL your liquid assets this property, even though you got a great deal on it. Life insurance proceeds are a classic "windfall" that should have been analyzed for the best long term return... Similarly while the 'income' you get from grandma's trust is nice, I have to say that $1400 is not exactly living like a king. Not really sure what your plan is here -- Associate's degree? Musician? Landlord? Outfitting a recording studio? Making a living at that in a rural area? All sound like low probability of success... Not trying to sound mean, just based on my experience as an real estate investor / landlord over many years as a side business to other more professional employment in the Chicago suburbs. Heck I personally have dealt with a few properties where folks DID have 'recording studio' and these were people that had connections to Top 40 type artists and they did not have an easy go of it...

Wish I had better news for you, but if you can put tenants in this property NOW, I'd probably do that -- you are going to need CASH to pay the taxes and such ASAP. If you have TWO + years of SUCCESS as a landlord you would look like a lot less of a RISK to banks and MAYBE you could get some of that equity out to fix the place up, but for now TRY and keep the thing together WITHOUT digging yourself a hole of debt that is going to be crushing. "Hard money" loans are far too an intrest rate for someone in your situation to consider. Long shot: family members. If other siblings want to "partner" with you could they lend you money to try and fix the place up? Again, NOT an ideal situation, but one that ought not kill you...
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 01:37 PM
 
93 posts, read 232,683 times
Reputation: 27
Quote:
Originally Posted by chet everett View Post
Insufficient income == no loan. The days of "liar's loans" are mostly gone -- and that is a good thing. These days the lenders WILL go over your income taxes and carefully analyze ALL assets you claim to have and if they are not comfortable they do not lend.

You are an awfully big risk. The "equity" that is in the property is nice, but there are a lot more important things in the current environment LIKE CASH FLOW. You might have been better off NOT sinking ALL your liquid assets this property, even though you got a great deal on it. Life insurance proceeds are a classic "windfall" that should have been analyzed for the best long term return... Similarly while the 'income' you get from grandma's trust is nice, I have to say that $1400 is not exactly living like a king. Not really sure what your plan is here -- Associate's degree? Musician? Landlord? Outfitting a recording studio? Making a living at that in a rural area? All sound like low probability of success... Not trying to sound mean, just based on my experience as an real estate investor / landlord over many years as a side business to other more professional employment in the Chicago suburbs. Heck I personally have dealt with a few properties where folks DID have 'recording studio' and these were people that had connections to Top 40 type artists and they did not have an easy go of it...

Wish I had better news for you, but if you can put tenants in this property NOW, I'd probably do that -- you are going to need CASH to pay the taxes and such ASAP. If you have TWO + years of SUCCESS as a landlord you would look like a lot less of a RISK to banks and MAYBE you could get some of that equity out to fix the place up, but for now TRY and keep the thing together WITHOUT digging yourself a hole of debt that is going to be crushing. "Hard money" loans are far too an intrest rate for someone in your situation to consider. Long shot: family members. If other siblings want to "partner" with you could they lend you money to try and fix the place up? Again, NOT an ideal situation, but one that ought not kill you...
hey chet, thanks for your reply, advice and concern... it is greatly appreciated. i've seen some of your posts and value your opinion. all bs aside, this property was too good a deal to pass up and if need be i will move in, after we spruce it up, with all my renters in tow. since the house is "livable" i will collect my rent and put that into the property little by little. presently i live in a 1 bedroom cottage on my aunt and uncles' farm so, i'm not rushed into a move. the plan is to take the next few weeks just to spruce up the house and cottage and lose the 70's look.


i already have new appliances for the main house and will pick up some decent lightly used stuff off craigslist for the cottage. moreover, i plan to replace the toilets, sinks and showers/tubs myself. the roof is ok for now... just a few leaks that can be repaired, the electric is only 60 amp but again i can live with it for now. the septic is fully functional, so i'm ok there too.

as`far as my future goes, i've been playing in bands since i was 12... venues include the stone pony, cbgb's, the birch hill, starland ballroom, etc. i've been recording in professional studios since i was 14 and am very well versed in this field. moreover, i am the studio drummer for the recording studio i intern at. i have many friends and associates in this field and my band has been looked at by a few independent labels. i am very confident i can make a real go of it, whether it be performing, producing and/or recording. i have most of the recording equipment i'll need to build my own studio... just a little fine tuning, no pun intended. my location is not as remote as you may think. although it is rural i'm not more than 1 1/2 hrs. from nyc or philly... definately not a problem for me or the people i run with.

i'm in agreement with the hard money... might as well go to a loan shark... not gonna happen. i was kind of hoping some of you experts might know some other way to "skin the cat". hope your "liar's loan" comment was in general and not directed at me. i've been up front and honest about this property to all i've spoken to... i hide nothing. it's my opinion this country's' in the quandary it is because of utter greed (wall street and oil co's) and stupidity (wall st and subprime lenders). this property is not anything close to a liars loan and would have been no problem had i been able to close before this housing mess and/or market "dump". with what i paid for this property there is no way for me to lose, i could turn around and sell it immediately for 2-3 x's what i paid for it. if it wasn't absolutely perfect for me (long-term), that's exactly what i would have done!

keep my situation in mind... should you think of something and/or come across an other option please let me know. thanks again for your reply, i really appreciate your being upfront and honest. have a good one.
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 03:09 PM
 
28,441 posts, read 71,029,142 times
Reputation: 18396
liar's loans were /are the term applied to "stated income loans" were there was literally NO attempt t verify the borrower's qualification -- too many people in situations not too dissimilar from that which you are in abused them and POOF no more...

When you said "rural" I was thinking "farm community" -- I suspect 90 minutes from NYC or Philly is closer to "fringe suburban". Your connections to ways to make money in those areas ought to be pretty good.

That said, you STILL need to be careful -- there is NO SUCH THING as a can't lose situation. You NEED to get the cash coming in and then you have to watch were you spend it, it is nothing short of amazing how many times I've personally seen people spend themselves into oblivion.

When it comes to places to spend money on the house/cottage you've bought you ABSOLUTELY MUST do everything related to maintaining the home in a WATER TIGHT state FIRST. Bathroom that are ugly can be dealt with later, you CANNOT allow a leaky roof to ruin stuff inside. Ditto for water from the ground -- make sure the gutters and downspouts are clear, the basement doesn't take on water, or the yard floods. Those are all ways to literally see the place become WORTHLESS... There was a post a little bit ago about TERMITES too -- landscaping is NOT just about having the place look pretty, you have to make sure that BUGS are not eating the place turning it into sawdust.
Reply With Quote Quick reply to this message
 
Old 12-24-2008, 05:21 PM
 
93 posts, read 232,683 times
Reputation: 27
Quote:
Originally Posted by chet everett View Post
liar's loans were /are the term applied to "stated income loans" were there was literally NO attempt t verify the borrower's qualification -- too many people in situations not too dissimilar from that which you are in abused them and POOF no more...

When you said "rural" I was thinking "farm community" -- I suspect 90 minutes from NYC or Philly is closer to "fringe suburban". Your connections to ways to make money in those areas ought to be pretty good.

That said, you STILL need to be careful -- there is NO SUCH THING as a can't lose situation. You NEED to get the cash coming in and then you have to watch were you spend it, it is nothing short of amazing how many times I've personally seen people spend themselves into oblivion.

When it comes to places to spend money on the house/cottage you've bought you ABSOLUTELY MUST do everything related to maintaining the home in a WATER TIGHT state FIRST. Bathroom that are ugly can be dealt with later, you CANNOT allow a leaky roof to ruin stuff inside. Ditto for water from the ground -- make sure the gutters and downspouts are clear, the basement doesn't take on water, or the yard floods. Those are all ways to literally see the place become WORTHLESS... There was a post a little bit ago about TERMITES too -- landscaping is NOT just about having the place look pretty, you have to make sure that BUGS are not eating the place turning it into sawdust.
hey chet, i've been working this deal since the early summer and have been watching the property very closely from that time. i put a very small down payment on it at the end of june and due to some legal matters, with the estate, it could not be sold immediately... too bad cause i could have had a loan with no problems at that point, oh well. i worked a deal with the owners' heirs... i was given a set of keys and agreed to keep an eye on the buildings and maintain the grounds while we waited to get the ok to close. although it cost me a little time and money, it was an invaluable investment. i was able to come and go as i pleased, brought others in to look at it and went over this property with a fine tooth comb. the roof does leak in a few areas but my uncles buddy is a roofer and will repair it at cost, to hold me over until i can replace it. he said i should be able to get a few more years out of the roofs (both buildings).

i understand where you're coming from with the can't lose attitude... i shouldn't have said that, i guess anything can happen. i do have insurance on the property, so i'm not too worried about losing much of anything. from what i've witnessed and seen the structure is rock solid, no leaks, no drainage issues anywhere (yard included) and a great "canvas" for me to start with. after seeing the property and hearing what i paid for it everyone, including my uncle who is a general contractor, is amazed with the deal i put together. i'm still not giving up hope on getting a "reasonable" rate loan... maybe wasting my time but everything i did to put this deal together, i was told it probably wouldn't work. where there's a will there's a way!

if you think of something down the line, drop me a pm. i'll be checking out the other posts to see if something doesn't grab my attention and trigger a solution. meanwhile i guess i'm on my own. thanks again and i hope you have a nice and safe holiday season.
Reply With Quote Quick reply to this message
 
Old 12-25-2008, 08:59 AM
 
Location: South Dakota
733 posts, read 4,194,754 times
Reputation: 715
Seems like there are identical threads going on this. So here's the reply I made in the "other" thread!

Sounds like you have a great opportunity! Here's what you have to do -

(1) Move into the place "as is" and reduce your own housing costs to utilities, taxes, insurance, and absolutely necessary mechanical repairs.
(2) Get a regular paying job to cover your "starving artist" problem and thereby cover the known, necessary costs itemized in #1. My artist friend down the street [potter, acrylic impressionist landscapes, pen & ink drawing & print maker] works full-time at his art and part-time in the public library to cover the costs of renovation of his house and studio.
(3) Contact local zoning officials to ascertain if your property is properly zoned for multiple living/residential rentals. If so, start renting the place out. If not, apply for appropriate zoning before you take on residential tenants.
(4) You will most likely not qualify for a residential mortgage since the property is a mix of commercial rentals [the studio] and residential rentals. So, move in and reduce your housing costs. Get your job so you have some employment and steady income. Then since this is apparently a small town I'll assume it has a small town, local bank. Get off the internet and get to know your local banker. Impress him or her with your industriousness and skill, be completely candid and honest about your long-term plan, including the $1400 per month income from your grandmother's estate. Many times small town lending is based on character and relationships as much as on credit scores and financial technical analysis. Build that relationship and demonstrate your character. You'll get either a commercial loan or some kind of mixed security loan that may not be able to be sold into the secondary mortgage market. But that's why you go to a small town, community banker. They understand the need to incubate local business while making a profit.

Good Luck! And Merry Christmas.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top