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Although YOU think you can afford it, you have yet to give us a good financial picture of yourself.
What is your credit score?
How much do you make?
How much do you have in savings?
Do you have a car loan?
Do you have any credit card balances?
Any other loans (student, installment, etc.)
Any other assets?
Just because you have a property management company working for you doesn't mean that you will be able to find a renter... And did you add that into your costs.. You said: "the amount of rent would probably cover the mortgage and HOA, but not much more." That property management company may put you in the red.
Previously, you said: " I have enough savings that if I didn't have a renter for a few months, I can make both payments." Now you are saying "several" months and you have additonal long-term savings. Exactly how many months of reserves do you have? Please don't tell me your "long-term savings" consist of your retirement accounts.
What happens if you lose your job? Do you have the reserves to cover your home and your empty condo? How much do you have in an emergency fund?
Would I jump on this deal... Possibly, but I could also buy it in cash.... However, I also don't know YOUR market so I don't know if I would do it.... Even if it "sounds" like a good deal, it doesn't mean that YOU can afford it.
Also, how much is your condo worth TODAY? It doesn't matter how much it sold for 3 years ago or what you paid for it.... That will also be used to calculate your net worth.... which also plays a role in determining your "worthiness"
That being said... None of us can predict exactly what a bank is going to tell you. I think it is going to be difficult for you in this credit market... because it sounds like you don't make enough money. You telling us that you would not be able afford a total of $125K in mortgages (provided you owe 75K on your condo and buy a 50K house) on your salary tells me that you either don't make a lot of money or that you have alot of other debt.
Please don't take this the wrong way I'm an entrepreneur at heart, and I think you have your head in the right place.... If you can actually afford what you are trying to do, there is a huge potential upside, which you see.... but I don't know if YOU are "ready" for what you are trying to do yet.
With what you have given us thus far, I personally would not give you the loan, but if you give us a better financial picture, that may change.
No way I would do that. Why would you want to extend yourself in today's market? I would wait a while and bank some cash.
A property management company generally charges 10% of the rental amount monthly in my area. They still call you when something goes wrong. They may arrange for repairs to be made but the cost is still on your shoulders.
It's just a very iffy time when it comes to investments and I'd wait it out.
You purchased the home you live in via FHA/Hud funding with a low down payment. And you signed papers stating you would live there. Now you plan on using it as an income property, not exactly what the lender had in mind when they gave you the loan. I seriously doubt the FHA would come sniffing around, but they might question why the address where you live is not the same as the house you bought.
As to the other home, you'll only qualify if you have the right debt/income ratio. Add up all your monthly payments and see what you have left.
And not wanting to put any money down is kind of what got this country in this financial mess.
Look around for a small bank that may allow bridge loans, they might consider projected rent money as income.
I bought a small condo in Septemeber 2008, and due to the crash of the housing market, I am desperately wanting to buy a bigger place (a house). Selling my condo is not an option, nor do I want to go that route. I bought it for well below market value, and will stand to make a lot of money off of it someday. My plan is to rent out the condo and live in the house. What options do I have to buy another place?
If I were to rent out my condo and go live with roommates again for a while, how long would I have to have the place rented for before a lender would approve me?
Is there a way to be approved for a loan while still living in the condo? Meaning, with no confirmed renters, can I be approved?
My condo loan is FHA, the amount of rent would probably cover the mortgage and HOA, but not much more. I know I can't go FHA again, so is it possible to have a 0 down mortgage again?
Your first problem will probably be the nature of the FHA Mortgage Loan. Unless I'm missing something, they don't loan money for Non-Owner Occupied (rental) properties. So I don't know what they'll do if you rent out the condo and try to buy a house.
That said, when you go to buy NOO Property, the rules change drastically. Most banks are going to make you have a 20% down payment. They're also going to do a lot of tough investigation into your entire financial picture - including debt-to-asset ratio, credit rating, income, etc.
Bottom line: NOO Property is a completely different animal than Owner Occupied.
If you can pull it off, good for you! But honestly, I doubt that you're going to make it fly.
Okay, let me see if I can put all my thoughts out there and still make sense.
First, when anyone buys a home as an owner occupied dwelling, they state it is their intent to make this their primary dwelling. It's hard to prove your original intent was to make the condo into a rental property. Did you change your address? Put utilities in your name? If so, you satisfied the requirement for intent. Had you put a "for rent" sign out the day after closing, you would be committing fraud. You should be fine.
FHA has what they call a "BUY AND BAIL" rule, meaning, you cannot use rental income to offset your current residence payment if you have less than 25% equity. Then, FHA also has a rule that you can only have one loan at a time with maximum financing. So, new FHA financing is out.
If you were to purchase conventional, Fannie and Freddie have the same "BUY AND BAIL" rule. There are pockets of portfolio funds out there, but they are going to be either charging a higher than market rate or have similar underwriting requirements.
And finally, forget what a home was selling for 2 years ago. It's not relevant and not necessarily an indication of the future. There are stats saying we could have a double-dipped recession and the longer we go w/out fixing the job picture, the more credibility I am giving those stats supporting that prediction.
As much as I would love to find a way for you to make this work, I don't see it happening.
I think I'm going to save up my money so I can put over 20% down. With just under $125k in mortgage loans, it's not like I'm getting in over my head. Had I been looking at half million dollar houses, then I can see how "it's not a good idea". Investing means buying when things are dirt cheap, and that's exactly what I'm trying to do. If I was trying to get a hard money loan, I can also see how that would be a potential disaster, but I'm not. 20% of the house would be around $12k, and considering I have about $9k right now, I can very easily save for the rest.
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