Purchasing an investment home for rental?

I am 25 years old and just purchased my first condominium in Portland, OR. I paid $89,000 and my mortgage payments including HOA, insurance etc. are a hair under $900 per month. I did an 80/20 and financed the whole balance for 30 years. After taxes I take home about $1800 per month. In two years I would like to purchase a second home to use as a rental (costing let's say $100,000). I am at 685 credit score and should be conforming in two years. Assuming I recieve no upgrade in pay between now and then, will it even be possible to finance a second property? If I am planning on paying the mortgage on it by renting it out will the lender look at that as valid income or do I have to make enough to cover the mortgage out of my check each month? Also any advice to a young working joe on getting into their first investment property(2nd propery) would be appreciated. Thanks

It sounds to me like you are looking to start your own business, so to speak, with rental properties. If this is the case, I might be able to help you. My company offers unsecured financial lines of credit to small business that run from $50K to $150K. This means you do not have to put your home or any other belongings up for collateral. With this line of credit, there are no monthly maintenance fees and you only pay for what you use and when you use it. In addition to, your credit rating only needs to be 630 and above. If you are interested and this looks like something you could used, please send me an email to triciakos@yahoo.com.

You could always go stated income on a new property, there's always a way to make the approval work.

Having owned several rental properties as investments I can tell you what worked for me.

First off, work on that credit score. That's "B" paper territory; you want to get it up around 720 or better if possible.

The easiest way to acquire a rental property is to lease out the one that you currently live in and then purchase a new property to live in. This works very smoothly if you have a positive cash flow on the rental since most motgage lenders treat the income and mortgage payments on the rental as a wash -- it has no impact, good or bad, on your new mortgage!

The other benefit of doing it this way is that mortgage lenders want a much larger down payment on investment properties and will charge higher interest rates as well.

So if you lease out your condo and then purchase a new home for yourself you'll be money ahead of the game on the purchase and have a much easier time getting a new mortgage.

Also, if you are buying investment property, the lender is going to look at your ability to pay the mortgage without benefit of rental income and will often require you to have at least 6 months worth of mortgage payments in liquid funds after closing.

Most mortgage contracts include requirements that you are purchasing the property as a personal residence, however there is no bar to converting the property once you've actually bought it and lived in it. This includes government insured mortgages such as VA and FHA. You do need to take some action towards moving some of your property into the home, even for a brief period of time, but I'd personally recommend actually living there for a year. This also makes the logistics of the process much easier.

A few state-sponsored programs (Texas' T-Vet comes to mind) do have "due on conversion" clauses that prevent you from leasing out property purchased with their program but even then you could always re-finance to a conventional mortgage and then rent out the property.

Lastly, ignore any come-ons here for funding. I wouldn't borrow a dime from some scammer using a Yahoo.com e-mail address! Anyone who posts commercial links in this forum is in violation of the Yahoo Answers TOS and should be treated with serious suspicion. You don't know who you are dealing with and the probability that they are SCAMMERS is extremely high.

At the very least, they are not abiding by the rules; do you want to deal with someone who can't play by the rules??

Bostonianinmo had some excellent advice about investing in Real Estate.

But as far as ignoring come-ons for financing, there are some very legitimate loan officers that take the time to answer the questions of others via the Yahoo Answers forum.

I do it all the time. I am passionate about my work. I love to talk about it and, frankly, my friends and family get sick of hearing about mortgages all the time.

I was very grateful to discover the Yahoo Answers forum. I can provide what I know to be honest, helpful information to people seeking answers. If it results in more business for me...great. If it doesn't, I enjoyed answering the questions and hopefully whoever read my answer gained some knowledge because of it. I take calls at my office all the time from people who have questions. Yahoo answers is simply a way that I can do it online and reach more people. Yes, it helps me, but it also helps the consumer.

As a consumer, I would definitely ignore someone who answers your question simply by saying "I can help. Contact me" and tells you exactly what you want to hear. Chances are they can't help.

But if someone answers your question intelligently, why not contact them and see if they can help you further? It's no worse than applying for a loan online at any of the other sites like Lending Tree or Ditech. All they are doing is selling your contact information to mortgage brokers who will contact you to see if they can earn your business.

When doing business with anyone you meet online or in person, you should always do your homework and check their credentials. Make sure they are licensed, call the Better Business Bureau to make sure there are no complaints against them, etc.

Not all mortgage brokers are sleazy, unethical people. It's simply a case of a few bad apples spoiling the whole bunch.