Archive for the 'Investment Property' Category

May 11

Purchasing Investment Property’s

Consumer Tips, Investment Property <ADMINNICENAME> No Comments »

I received this great email and I know that this question comes across a lot… Please feel free to call me and ask me questions… Also keep in mind and go back to the handyman blog before this one - they both can be used together.

Hello Jeremiah. Hope you are doing well. I am hoping you can shed some light on some questions I have regarding loans for investment properties.How does one qualify for a second mortgage on an investment property? I hear that lenders rather have a property that is already rented to ensure cash flow or they require the real estate agent to write that the property has potential cash flow and that will be enough. Is this true? Can you just tell me what the general rule of thumb is to be a candidate for investment property loans?

Also, how does one go about purchasing properties under an incorporation? How is this better/worse or different than purchasing under your own name? Do you have a less or better chance of getting money lent to you?

I thank you for your anticipated insight. It is evident that I aspire to invest in real estate, but I am concerned about getting the financing to do it. Any information that you may have that may help that I didn’t ask above would be greatly appreciated. Thanks for your time.

Cecilia

 And here is my response:

Hi Cecilia -
 

A lot of good questions… I will try and pick each one apart for you…
 

If you went to purchase a property - there does not have to be tenants.  Part of an investment purchase appraisal is to tell me the lender how much money that the rent will be in the area the home is in.  They will take other comparables just like they do for appraising for the value.

Rule of Thumb: When I qualify you for the loan I am going to use 75% of the proposed rental income the appraiser comes up with as income to be applied to your bottom line income.  For Example: buying a single family home that brings in $1000 rent.  I will use $750 more to your already documented income to qualify for the home.  Making it so people who don’t they qualify can.

Purchasing under a corporation is really not an option.  It can be done but the amount of down payment is much greater then a regular mortgage.  Mortgages on residential homes need to be personally guaranteed; meaning that it is in your name and not under a corporation.  The best thing is to speak to your CPA or financial advisor when drawing up a new company and how you can put the weight of the liability solely on the corporation.  For example: writing the lease agreements in your company’s name would make the lease agreement between the tenant’s and the company - not the tenant’s and you personally. 

I have done a few of these personally feel free to call me and ask any more questions you may have.

Thank you,
Jeremiah Phillips
856-663-7800 Ext. 566
888-331-6300 Ext. 566 Toll Free
866-266-1966 EFax
609-760-9234 Cell
jphillips@firstmutualcorp.com

Apr 18

Construction or handyman money for your home

Consumer Tips, Investment Property, Loan Types <ADMINNICENAME> No Comments »

A question I get a lot when working on mortgages is: Can I get more then I am purchasing the house for help do some renovations?  This question can be answered with a “YES”.  If you are looking at handy man specials or possibly tearing down a home and rebuilding it-  I have the loan for you.

 I have done a few of these for my friends from buying a row home in Philadelphia to a house in the South Jersey suburbs and they love it!  One of my friends was able to turn around and sell the house and profit over $30,000 and only having to make one mortgage payment out of his pocket before it was sold-  ASK ME HOW!

To get started the final value of the home is going to need to be valued higher then the totals of the initial cost and the renovations. Each situation is different and if you are going to be living in the house after the house is renovated we can give you a loan with less left over equity at the end of the day.

How is works?
1. At the time of closing we will do a mortgage for the cost of the house and the renovation costs. There will be draws against the renovation costs as you finish some of the work. A certified contractor will be needed to verify the work has been done.

2. After all the work is done depending if you are an investor or this is going to be your primary residence we will not have to close again or we will have to do a final closing based on the finished value of the home.

Note: If there is enough equity in the house the mortgage payments during the construction phase will actually be added into the mortgage: Meaning - NO CASH OUT OF YOUR POCKET, which I like!

We will have to get estimates from professionals in the fields of work that the renovations are going to be done. This does not mean they have to perform the work. If you are a skilled laborer and you are going to do some of the work yourself it could save you money as long as the work performed meets building code requirements.

As with any type of loan the applicant must qualify according to the loan qualification guidelines but considering one of the guidelines is a minimum 620 credit score it appears many will take advantage of becoming a first time home owner or consider investing in real estate.

If you would like to talk about this loan, how it works, and how to qualify for it give me a call at 609-760-9234 or email at jphillips@firstmutualcorp.com…. I am available weekends and evenings!