@Anonymous wrote:
Although there may be other stuff out there, that is about the way it is.
Too many people claimed to be buying second homes or rental properties and then bailed on houses that they owed way more than they were worth.
Also, just to clarify, this is how is should be. If you can not afford that much down and the higher rate and such, what are you going to due when the roof needs replaced, the AC goes out, or a plumbing leak causes 15K in damages. Not trying to be all holy and stuff, it's just common sesne being applied to the mortgage market and anyone that has been around the market for awhile knows taht common sense has been hard to find the last few years....
Also, you may have to qualify for the second home without any rental income for DTI purposes. They are asking for rental history in some cases to qulaify that income as too many people were falsifying rental contracts and such. It makes it hard to get the first property going. also, in general, rental properties only get profitable when you have a few. The profit you make on 1 property rarely covers much more than you mortgage, upkeep, reserves for in-between tenants, etc. With 30% down, this may not be as much the case, but you are still taking 30K out of some other money asset and then paying interest on the rest. Even with appreciation it is a close case whether you are making any money.
Mulitple properties or multi unit properties are different of course.
Thank you for the response.
It is a multi-unit complex (2 duplexes, 4 units). We should make the debt to income w/out any rental income. It will be flush the first month or we won't buy it. I wonder if there is any significant increase in defaults between putting 20 and 30% down. It seems like you have to be pretty committed if you put 20% down.
Even though the housing cost is low given where I live, 20% down comes to more than 80k with closing costs. I would lose a leg before I would walk away from that commitment. And, I cannot accessing more than the 110k that 30% comes to while trying to get the rentals going.
I completely understand the need for realist caution, but it seems like we have entered the prohibition years regarding loans in response to the Roaring 20s. I know the Roaring 20s and prohibition coincided, but the imagery worked. I agree that common was lost and people who were not ready to own property were given loans. Now, the pendulum has swung to the other side and common sense still seems to be missing.
