Need Help To Starting Investing.
I am looking into purchasing a new house and want to keep my current house to rent.
How do you work the mortgage so that the current home that will be rented is "Not counted" against the new loan process?
Does it have to be rented before the new loan process is started or is there a way arround it?
Thanks in advance for any help you can give.
Mike
Well that's a good question. I really am looking into starting a long term plan, but I'm also looking for advise.
Since I do not have capital to just start investing I thought this would be a good way to get started. This would give me an opportunity to have my first rental property and hopefully create the momentum I need to really start moving.
Right now I obviously can't afford 2 mortgages and any broker will see that right away.
The tricky part is that I could move out of my house into an appartment and then rent my house out. At that point I could prove that the property is leased and technically I would not be tieing up my income to pay the mortgage.
I would like to be able to do it all in one stroke and not have to take that expensive step of moving out first.
Also I was considering contingency clauses in the offer for the new house. Similar to basing the offer on the sale of the current residence. Except, in my case I would want to base it on the successful lease of the current residence and obtaining loan funding. Has that ever been done or would that work with the new house seller?
Thanks for any input you have.
Mike
Do you need help to start investing, or just advice on how to pull this off, without getting caught up in a mess?
Strictly speaking taxwise, this may not be the best course of action, especially if you have any equity in the current property. IF you've owned and lived in the current property for at least 2 yrs, then any "profit" from a sell will not be taxed (seek a tax advisor for details). If you convert your current own to a rental, you'll lose this tax break.
As far as obtaining loans goes, a good mortgage broker and your credit will be more important than your income. The income problem can be avoided altogether, though the rates/fees may be slighter higher than average to do so.
IF you want to show rental income without actually having any yet, you can get an appraiser to do a rent market analysis which will show an opinion of what price you would be able to rent the property. Most lenders will consider 75% of the monthly rent as 'income.'
Roger