I'm about to purchase a home using a TMP79 down payment assistance program 5% plus a gift of 1.5% from a agent refund and mortgage credit certificate

Asked by Lee Ellis, Dallas, TX Thu Jan 23, 2014

What I would like to do is buy a 250k fourplex. My salary is 55k only debt is a 350 car note but my lender only said could do 170k the 3 other units in the building would bring in 1800/mo in rent but the lender said that can't be considered since I don't own a multifamily.. Is that true? Got 7k cash

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Bruce Lynn, Agent, Coppell, TX
Wed Jan 29, 2014
I want to be brutally honest with you and say this sounds like a disaster to me.....with the new mortgage rules I don't think most loan officers would sign off on this, nor would most underwriters.
I like your thinking of course....but this would all have to work perfectly forever to make it work, and we always have to consider the downsides....what if two tenants move out at the same time and you have 2 months vacancy, then we have a crisis. Flip the tables....if you had $250,000 in cash, would you lend to your cousin or family member in this scenario?
I have seen some $100,000 duplexes for sale recently and if you really want to be an investor, I would feel a whole lot more comfortable with that idea.....I'd really like to see that you have better reserves too. Set yourself up for success.
If the duplex works and you like being a landlord, give it a couple of years and expand from there.
0 votes
Don Groff, Agent, Austin, TX
Fri Jan 24, 2014
As was stated you will want to verify that you can use the TMP79 program for your down payment. It may not be allowed to be applied on a multi-family dwelling. If you do not have any landlord experience that cannot be showing on your tax returns many lenders will not allow you to use the rental income until you can show the two years. Not all of them but many follow those guidelines. The units would need to be rented now with a lease agreement to be able to possibly use the income as well.

Hope this helps.

_____________________________________________________
Don Groff | REALTOR® & Mortgage Broker
Austin Real Estate Pros & 360 Lending Group
o 512.669.5599 | m 512.633.4157 | listings@dongroff.com
websites: http://www.AustinListed.com | http://www.360LendingGroup.com
Web Reference:  http://www.AustinListed.com
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Thu Jan 23, 2014
You can’t use the Realtor rebate as part of your down payment, your facts didn’t say that was your intention, but it was a little fuzzy, just pointing it out. Next, most loans allow rental income to be used, but government sponsored DAP programs usually do not allow the purchase of rental property. The web site for your program says single family or duplex which means you could not use their DAP on a four plex even if you quailed for the loan. Check the FAQ's on their site.

Good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:  http://jamessimms.com/
0 votes
Dallas Texas, Agent, Dallas, TN
Thu Jan 23, 2014
No professional can render an opinion for fact we are not part of the transaction all the conversations.

1. Many times what a buyer THINKS they can purchase what is real are 2 different amounts. 2. Standard rule of thumb when I am speaking with a buyer what is your income x 3 .
3. Your statement above I would assume you could purchase in value range of approx. $165K - or + without total review of the debt ratio , closing costs, down payment and etc.
4. $170K sounds within 3 x income amount less down payment
5. Lenders don't want any buyer to over extend themselves have deal with foreclosure and etc. AND if a tenant moves out property (unit) is vacant you still have to afford the empty space till a new tenant move.
6. Landlord you will also have repairs , additional costs to maintain the property. If you don't tenants won't lease the property OR renew their lease.

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