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Currently buying on land contract

Established Contributor

Currently buying on land contract

I am currently buying 5 homes on land contract, 4 are rentals and have been for 4yrs. I am considering financing via a bank going conventinal Mort. by 2015 and have a couple questions.

 

Back Ground:

Self employed 6 yrs, rentals for last 4yrs, are all on my tax returns plus a seperate business of 6yrs.

 

I know DTI will be a factor. What is max Front End, Max Back end DTI's %'s allowed?

 

Rents are deposited in two 2 seperate chaecking accounts in 2 states. It wont be hard to provide copies.  Seperate business is ran online with payments going into my Pay Pal account, I have been saving statements as well.

 

What other items or challenges am I up against that I need to make sure I am ready for?

 

Inquires on my CR will be down to 3. How much Cash on Hand should I have set aside for closing, appraisal and such?

 

Thanks for any input!

 

12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
7/31/16 TU 710 ~ EQ 699~ Ex 705
My Wallet: Cap1 3,500K ~FH 2950 Credit One 1800~Credit one #2 1500.00~Orchard Bank 400 ~NFCU nRewards 18K~NFCU Cash Rewards signature| 11K ~Care Credit 4,500
Message 1 of 10
9 REPLIES
Super Contributor

Re: Currently buying on land contract

This won't work as a conventional (fannie/freddie) mortgage

 

small community bank or land bank might help you.

 

i have no clue what score/dti requirements are.

 

Retired Lender
Message 2 of 10
Established Contributor

Re: Currently buying on land contract

Can you elborate why it wont work going with a conventional type mortage? is it because its not primary residence?

 

Edited to add:  Since I am a NFCU member and they do Investment property, I am assuming they would be a good source to finance these through then, Correct?

12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
7/31/16 TU 710 ~ EQ 699~ Ex 705
My Wallet: Cap1 3,500K ~FH 2950 Credit One 1800~Credit one #2 1500.00~Orchard Bank 400 ~NFCU nRewards 18K~NFCU Cash Rewards signature| 11K ~Care Credit 4,500
Message 3 of 10
Super Contributor

Re: Currently buying on land contract

conventional will do a multi-unit property.  duplex. fourplex.

 

but not 5 houses on a piece of land

 

unless i misunderstood the question. you are buying 5 houses on a piece of land?!?!?!?!?

 

 

Retired Lender
Message 4 of 10
Established Contributor

Re: Currently buying on land contract

5 homes on 5 seperate peices of land. Each has its own mailing address, property taxes etc.

12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
7/31/16 TU 710 ~ EQ 699~ Ex 705
My Wallet: Cap1 3,500K ~FH 2950 Credit One 1800~Credit one #2 1500.00~Orchard Bank 400 ~NFCU nRewards 18K~NFCU Cash Rewards signature| 11K ~Care Credit 4,500
Message 5 of 10
Highlighted
Moderator

Re: Currently buying on land contract


ktl72455 wrote:

5 homes on 5 seperate peices of land. Each has its own mailing address, property taxes etc.


Dallas, isn't there a limitation to the number of properties any one individual can finance with Fannie Mae?

I found this Fannie Mae announcement for investment properties. I don't know if this is the most recent or not so Dallas or Shane please check to make sure the information is correct.  Here is the link direct to fanniemae.com https://www.fanniemae.com/content/announcement/0902.pdf

Message 6 of 10
Super Contributor

Re: Currently buying on land contract

Are the land contracts recorded?

 

If so, then this could work out with conventional financing... investment properties require 15% down, primary you can do with 5% down.

 

Debt ratios would likely be 45% for front/back.  6 months PITI in reserves needed for each financed investment property, no reserves should be needed for the primary residence (although automated underwriting may condition you for 2 months PITI in reserves).


Freddie will finance up to 4 investment properties, Fannie will finance up to 10 (with additional restrictions after the first 4).

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Message 7 of 10
Established Contributor

Re: Currently buying on land contract

Only the buyer/seller have copy's of the land contracts. None are recorderd at the court house. But will be at the end of the contract. I suppose if need be, they could be recorded now. I'm not sure how hard or easy it is to do, maybe its something I need to check into.

 

I have noterized contracts and have been making payments on each for 3 & 4 yrs now with reciepts for each payment made.

 

12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
7/31/16 TU 710 ~ EQ 699~ Ex 705
My Wallet: Cap1 3,500K ~FH 2950 Credit One 1800~Credit one #2 1500.00~Orchard Bank 400 ~NFCU nRewards 18K~NFCU Cash Rewards signature| 11K ~Care Credit 4,500
Message 8 of 10
Established Contributor

Re: Currently buying on land contract


ShanetheMortgageMan wrote:

Are the land contracts recorded?

 

If so, then this could work out with conventional financing... investment properties require 15% down, primary you can do with 5% down.

 

Debt ratios would likely be 45% for front/back.  6 months PITI in reserves needed for each financed investment property, no reserves should be needed for the primary residence (although automated underwriting may condition you for 2 months PITI in reserves).


Freddie will finance up to 4 investment properties, Fannie will finance up to 10 (with additional restrictions after the first 4).


just to clarify...  6mo on all investments or just the ones I am having a bank refinance to pay off the land contract?

Example I have 5 but only want 2 financed in june of 2015.

Thanks!

12/4/12 TU 589 MyFico ~EQ 579 MyFico ~EX 577(Fako)

Myfico 8 scores
7/31/16 TU 710 ~ EQ 699~ Ex 705
My Wallet: Cap1 3,500K ~FH 2950 Credit One 1800~Credit one #2 1500.00~Orchard Bank 400 ~NFCU nRewards 18K~NFCU Cash Rewards signature| 11K ~Care Credit 4,500
Message 9 of 10
Valued Contributor

Re: Currently buying on land contract

i don't know specifics in your case, but in our case, we are buying a new house and have an investment property.  we are required to have 6 months reserves for the home we are purchasing AND 6 months reserve for the investment property.

 

it may be different with a refi, and it may vary by lender.

AmEx Green NPSL | Amex BCP 16K | Citi Simplicity 10k | Discover IT 9K | Chase Slate 7.5K | Amex Hilton HHonors Surpass 7K | Capital One QuickSilver 6K | Home Depot 5k | Chase Freedom 4.5K | LOC 2.5K
Message 10 of 10