Posted by Dimpil on October 18, 2003 at 06:50:04:
I was speaking of a bank line of credit based on your credit, business plan etc. I have do not know how to do it, which is why I want to go to Ed G’s seminar.
Non-Owner Occupied - Please Help!! - Posted by Newbie
Posted by Newbie on October 17, 2003 at 19:26:53:
Hello, I’m new to this and have been reading and researching this great site. About to buy my first Triplex and was able to get 95% non-owner occupied loan due to good credit. However, the interest is only fixed for 2 years and not that low, 5.7%. I want to keep the property for longer but don’t want to chance the higher interest rates. I know I can do better owner occupied, but I live 3 hours away from the property and my broker told me lenders would be suspicious. Other investors have told me that you always need to put in at least 20% for investor property, which is not what I’m reading here. My questions are:
- how do you get good loans where you put little down but the terms are still as good as owner occupied? Or do people just lie and always state owner occupied? How do lenders believe that after a few times?
- if you have to keep taking out non-owner occupied loans, how does anyone ever have enough cash to put down more than 5% to keep your interest and payments low enough?? (so you don’t have a negative cash flow)
- I also have a line of credit on my current home which I’m thinking of taking out to buy a second property, but I hesitate because isn’t that just using debt to pay for debt?
Please Help! Thanks!
Re: Non-Owner Occupied - Please Help!! - Posted by Wayne-NC
Posted by Wayne-NC on October 19, 2003 at 14:55:55:
I like your question 3. There is nothing wrong with using an HELOC for rental property, just be sure to include its costs in the buy analysis. You are not trading debt for debt. Think of it as using debt to buy assets. Financial leverage is what it is called. Be careful how you use it though.
Re: Non-Owner Occupied - Please Help!! - Posted by Dimpil
Posted by Dimpil on October 17, 2003 at 19:42:12:
5.7 is EXCELLENT for a non-owner occ. And no you don’t always have to put 20% down if you have good credit. Why lie to get the property. You may be able to refi in 18 months for a fixed rate or just ask the loan officer what a fixed rate would be.
Lenders look at things this way; Risk. You would more likey let the home go if you started getting into trouble but save the home you live in so the RISK is greater for them. With greater RISK comes higher rates.
Why not try to get a line of credit to purchase investor homes vs using the equity in your home?
Re: Non-Owner Occupied - Please Help!! - Posted by newbie
Posted by newbie on October 17, 2003 at 19:59:11:
Thanks for the comments. The 5.7% is fixed, but only for 2 years. Problem is I want to hold for at least 5. How do I get a line of credit without taking a home equity line of credit? I thought you could only take out a line of credit if you own a home as collateral?
Re: Non-Owner Occupied - Please Help!! - Posted by James Strange
Posted by James Strange on October 18, 2003 at 18:45:37:
Triplexes have higher rates than SFH’s.
Less than 10% down has a higher rate.
The rate sounds fairly good for a 2 year ARM. But I have not looked at a rate sheet in over a month.
James Strange
Re: Non-Owner Occupied - Please Help!! - Posted by Dimpil
Posted by Dimpil on October 18, 2003 at 06:52:43:
Ask how much a fixed would be. Lenders also offer 3 year fixed, 5 year fixed, but the rate will differ. Again ask your loan officer and tell him what you would like to do, hold for 5 years. You may also want to see if you can get an interst only loan, but you may have to put money down to meet the LTV requirments.