Home Buying in Brooklyn>Question Details

Nwakid, Home Buyer in Brooklyn, NY

Can a $60k income handle a $480k mortgage on a 4 family income property?

Asked by Nwakid, Brooklyn, NY Thu Jul 23, 2009

Need realistic viewpoints, real world knowledge, recently put offer in on 4 family house in Bed-Stuy (Brooklyn) New York, house being sold around $110K under market value. My plan is to rent out three or the units ( estimate caqn get $3500 to $3800 for rental income ) to help pay for mortgage and expenses, house is currently vacant. I am seeking an FHA loan and putting 3.5% down payment, getting $ 8k in seller concession ( possible $12K), house needs upgrading of electric and cosmetic repairs ( estimating between $50k and $75k renovation expenses), I would be looking at a monthly payment of approximatelt $3500.

I' m nervous, scare, I think I might be over my head. Looking for feedback as to whether this is realistic or doomed for failure. Im a first-time home buyer looking for long term investment. Any and all help is greatlt appreciated. Thanks to all.

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6
Hello, first I am proud of you for even asking this very detailed question. Many first time home buyers are usually scared to plunge into real estate. The questions is always, "Am I making the right choice?"

The fact is, we all know deep down in our gut if we can handle a certain mortgage amount or not. You know as well and you know your habits with money better than any mortgage broker or real estate agent.

The point I always make to first time home buyers purchasing a multiple family home is, if one or two of the tenants didn't pay you rent for just one month or more could you AFFORD to make up that money and pay the mortgage on time. Multiple family homes are tricky because you see the income, but if you were to have a problem tenant or two could you foot the bill until that person paid the balance, got evicted and then time to find a new tenant.

Also, you need to ask yourself if you have what it takes to be a business man and a landlord. Not all of us are cut out for all the work it takes to manage a building and to keep up with tenants and stomach the stress of collecting the rent. So you really need to think about your personal finances and if you want to be a landlord to three other people long term.

You mentioned that the property will be vacant and you will be doing renovations and electrical work. That means when you close you will have no income coming in. That means you will have to wait maybe 2-4 months before tenants can move into a safe building that is suitable. QUESTION: During the renovations, will you be able to make up the mortgage each month on your own? This is an extremely crucial question because your income is only $60,000 and I'm sure you have other expenses, hopefully you have at least 4 to six months of reserves in the bank to cover the mortgage while all of this is taking place.

Also if you go through with this deal and you decide to later down the line that you want out for whatever reason make sure this property is resellable. Ask an agent to find out if you can get a list of recently sold homes in the area to see what they sold for so you know what kind of property you have on your hands.

I wish you good luck in whatever you decide, but you already know in your heart what you can handle. I hope this answer has helped you and feel free to contact me anytime.

Rhonda Holt
Full Time Top Sales Agent
Specializing In Co-ops and Home Sales
Weichert Realtors, H.P Greenfield
Brooklyn, New York
Cell: 646-725-5941
My Site: http://www.KandHhomes.com
Email: HelpMeRhonda1919@Yahoo.com
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Web Reference: http://www.KandHhomes.com
0 votes Thank Flag Link Thu Jul 23, 2009
Thank you for your answers, i appreciate the help. I forgot to mention my mother be a co borrower on the loan, she income is estimated at $30 k per year. I have consulted a mortgage broker who specializes in FHA loans, I have been preapproved for $450k to $500k.
0 votes Thank Flag Link Thu Jul 23, 2009
Way over your head in my opinion.

By all means speak with a local lender, but I doubt you will qualify. To qualify for a mortgage you yourself would have to qualify for the entire mortgage payment based on your income. Potential rent would not be considered in qualifying, especially if the home is vacant.

On an FHA loan, typically all of your debts including the mortgage payment cannot exceed 42-50% of your income. Even if you have $0 debt - no car payments, credit cards, etc - if you make $60k per year then your maximum allowable debts including proposed mortgage payment could not exceed $2100-$2500 per month. And again, rental income would not be able to be used to help qualify.
0 votes Thank Flag Link Thu Jul 23, 2009
I would suggest you speak with a mortgage broker that specializes in FHA loans. I am not sure if you would even be able to get FHA financing on this property because of the amount of money that would be coming from apartments that are not currently occupied and you couldn't prove income on them. If I can assist you in some way, please contact me.

Ralph Windschuh
Associate Broker
Century 21 Princeton Properties
631-467-0009
rwindschuh@c21princetonproperties.com
0 votes Thank Flag Link Thu Jul 23, 2009
I would suggest you speak with a mortgage broker that specializes in FHA loans. I am not sure if you would even be able to get FHA financing on this property because of the amount of money that would be coming from apartments that are not currently occupied and you couldn't prove income on them. If I can assist you in some way, please contact me.

Ralph Windschuh
Associate Broker
Century 21 Princeton Properties
631-467-0009
rwindschuh@c21princetonproperties.com
0 votes Thank Flag Link Thu Jul 23, 2009
Oh, I forgot to mention that i have excellent credit ( high 700), just on a tright budget with money. i dont want to use all my assets for this property, I need to hold on to some assets for a rainy day.
0 votes Thank Flag Link Thu Jul 23, 2009
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