Thanks for your question.
By all means if you are more comfortable with condo payments then go with a condo
that is FHA approved. Finding one and getting an offer accepted can be a challenge
Work with a Realtor who understands.
Also keep in mind one can take baby steps and suceed.
Renting after 2-3 years makes sense.
Chuck, hit it right on the nail. The only thing I would add is, what are the current rental rates for condos in the area you are looking at?
Take the current rental rate,
Minus HOA fees,
Minus estimated mortgage monthly payment (including mortgage insurance, if any),
Minus estimated property tax
Minus estimated condo insurance
= cash flow.
Take cash flow and multiply times 0.92 for any minor repairs or vacant time that you need to put as a cushion for any minor repairs.
The final number is how much you will have left over. If that number is less than $100 per month, think twice about renting. A stove needing to be replaced will cost you about 5 months or more of your total cash flow.
Others may be happy with just getting the condo mortgage paid, but experts don't agree with that.
You are not in the business to pay for others to have a place to rent. You want to get in the business of making money from people that rent from you.
That's just my 12 years of real estate investment talking!
Any concerns, ask on this forum, or contact me via my profile.
Realtor, Certified HAFA Specialist (CHS )
Coldwell Banker Residential
1) That would put you in good position to take advantage of the Capital Gains Tax Rule. So this way, you could decide if you want to keep it before the 5th year. Check with your tax adviser to confirm.
2) When purchasing a condo with the intent to rent it, you'll need to take into consideration the cost of the HOA and if your able to convert it to a rental. The CC&Rs and HOA docs may restrict this as a possibility.
3) The margin on a condo rental is typically lower. Now would be a good time to ask your lender if this situation would be a positive, negative or a wash on a future purchase. They are likely to tell you, they will only take into consideration a certain percentage. I know it may be two years away, but try to get as much information as possible.
I hope this helps you,
Rocky G.H. Hawrysz
Prudential California Realty
(209) 444-6610 Direct
(209) 433-2000 Fax
(209) 915-6209 Mobile/Text
License No. 01468373
- Is the location and market in the area warrants that (Value vs. ROI).
- Are there any HOA dues, if so how much and what does it cover?
- IF value in the area does not change in 2 years, can the rent cover your mortgage payment.
- Most Condos have regulations about the percent of units can be rented at any given time. What if there are no openings to rent in two years what should you do.
- Why not invest in a smaller home that can be rented anytime you want? No HOA, Rules and restrictions?
- Did you talk to your lender about the units that are available to FHA financing? You should.
These are few of the questions you should be asking yourself and getting an answer for that should help you answer your own question.
Chuck Bukhari - Your Realtor
Exit Realty Consultants
Another thing to consider is whether or not the condo you want to buy with an FHA loan, is in a complex that is FHA approved. You want an experienced/agent broker to help you with that. Also, depending on what area, you can find some really great deals for single family homes!
McAllister Homes Real Estate
You may qualify for CHF Access half percent downpayment program with a minimum 580 fico score and which can contribute towards your closing costs as well. You can rent out your home with this program after the one year of occupancy. There is also a CHDAP half percent downpayment program but it does not allow you to rent out your home. You would have to sell or refinance out of a CHDAP loan. You have to live in it the whole term of the CHDAP loan.
It only takes a few dozen questions to qualify in minutes. I specialze in Under 640 Fico Score Loans and offer credit repair at no cost to raise fico scores to qualify. Here are some links to study and consider.
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
REO & Short Sale Specialist
Credit Repair At No Cost
20+ Years Experience
9am till 9pm 7 days