Anyone here have rental property?

Yaj Yak

Gladys
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I have a current mortgage on my home, with a relatively small payment, and am considering buying another home right now and am moreover curious how me having a mortgage presently can affect another...

I haven't rented out the house I live in just yet, nor have I been a textbook defined "landlord" in the past so I can't claim any money I may or may not make from the property I currently own from what I have read.
 

Fast99Snake

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prop taxes on the rental property will go up I believe as you will no longer be able to claim homestead exemption.

The bank will want you to have income to be able to cover both mortgages without the rental income I believe. Mortgage standards are changing big in January so if you're going to do it now is the time from what I've heard as far as getting approved for a mortgage you might be stretched a little bit on.

I am definitely not an expert on this though.
 

Turk

Lt. Ron "Slider" Kerner
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It'll be very hard to get approved for the other loan unless you have over 50% equity in the house. The banks are afraid that if times get hard, you'll simply walk away from the home you are renting so they like to see a lot of equity to persuade you to make the payments.
 

Jack

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I have a current mortgage on my home, with a relatively small payment, and am considering buying another home right now and am moreover curious how me having a mortgage presently can affect another...

I haven't rented out the house I live in just yet, nor have I been a textbook defined "landlord" in the past so I can't claim any money I may or may not make from the property I currently own from what I have read.


I'm a bit confused.. are you looking to purchase a house as an investment (i.e to rent out)? or purchase another home to live in and rent out your current home?

those are two very different scenarios.
 

smith876

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Mar 29, 2004
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KC, MO
Some good advice above, but to share a few thoughts....

From a bank perspective it will likely come down to a few things:
1. How high is your 'regular' source of income and what does your credit report show. If you are already deeply extended in terms of debt or other payments vs. income. Then it may be hard to work another loan (at least at a favorable rate).
2. You can greatly improve your options if one of the properties already has tenant(s). I've found that if a property is cash flowing the bankers get giddy and are much happier to work with you. This plays into what ktraver97ss is pointing out.


In all of our properties we are coming in with 25%-30% down, each property shows positive cash flow (or potential) before we purchase. I do not know what other rental investors target, but on paper each property we enter has the potential to payoff a note within 7 years solely based on property income vs. expenses.

happy to share info or answer any questions...
 

Yaj Yak

Gladys
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I'm a bit confused.. are you looking to purchase a house as an investment (i.e to rent out)? or purchase another home to live in and rent out your current home?

those are two very different scenarios.

Purchase another home to live in and rent out current house.

Some good advice above, but to share a few thoughts....

From a bank perspective it will likely come down to a few things:
1. How high is your 'regular' source of income and what does your credit report show. If you are already deeply extended in terms of debt or other payments vs. income. Then it may be hard to work another loan (at least at a favorable rate).
2. You can greatly improve your options if one of the properties already has tenant(s). I've found that if a property is cash flowing the bankers get giddy and are much happier to work with you. This plays into what ktraver97ss is pointing out.


In all of our properties we are coming in with 25%-30% down, each property shows positive cash flow (or potential) before we purchase. I do not know what other rental investors target, but on paper each property we enter has the potential to payoff a note within 7 years solely based on property income vs. expenses.

happy to share info or answer any questions...


I'm not that extended at all... my house I currently live in and pay on I am into very well and my payment isn't even remotely terrible.


I'm meeting with my mortgage guy tomorrow, I am not very optimistic, but it's worth a shot...
 

Yaj Yak

Gladys
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It'll be very hard to get approved for the other loan unless you have over 50% equity in the house. The banks are afraid that if times get hard, you'll simply walk away from the home you are renting so they like to see a lot of equity to persuade you to make the payments.

I've read 30% is the actual real number and my mortgage guy said similarly earlier.
 

Yaj Yak

Gladys
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May 24, 2007
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prop taxes on the rental property will go up I believe as you will no longer be able to claim homestead exemption.

The bank will want you to have income to be able to cover both mortgages without the rental income I believe. Mortgage standards are changing big in January so if you're going to do it now is the time from what I've heard as far as getting approved for a mortgage you might be stretched a little bit on.

I am definitely not an expert on this though.

I didn't think of this portion either.


changing in a bad way I assume then?
 

smith876

Displaced Chicagoan
Mar 29, 2004
277
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KC, MO
Purchase another home to live in and rent out current house.

May make it a touch bit tougher as there is no historic income from the current residence, but if your income to debt ratio is there it may work out.

Also, it sounds silly to say out loud. But really, shop around for banks and deals. The last transaction we executed we looked at three banks. The loan rate on the three banks spread .75% which comes out to a good bit of money.

-josh
 

Jack

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Thanks for the info.

What makes it somewhat feasible is my monthly payment on my house currently is very low and I could just about afford both homes by myself...

One thing you're overlooking is that your current home's mortgage likely has a clause requiring that it remain your primary residence and not an investment property. I know mine did... but I didn't care, because if they called the mortgage note, I had the funds to pay it off.

Additionally, you'll need to notify your insurance company that you're renting the place out, which will change your policy.
 

Yaj Yak

Gladys
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May 24, 2007
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One thing you're overlooking is that your current home's mortgage likely has a clause requiring that it remain your primary residence and not an investment property. I know mine did... but I didn't care, because if they called the mortgage note, I had the funds to pay it off.

Additionally, you'll need to notify your insurance company that you're renting the place out, which will change your policy.

Got it. I will look into it as well..

I don't think mine does because it is a conventional loan... but could be wrong and that could have no bearing at all.
 
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