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  prequalifying for loans for income properties
prequalifying for loans for income properties Sign In/Join 
Here's the scoop: DH just got a job offer in another state. Looks like we'll be moving!

But- we haven't decided yet whether or not to sell or rent out this house. (potentially this house could be income property #1)

We had originally discussed renting a townhouse or condo in our new location until we got the lay of the land. (we rushed into buying this home and don't want to make the same mistakes) Then we would buy our dream house/property within a few years.

BUT- last night I wondered if maybe we should buy a townhouse or condo (instead of renting) and then turn it into an income property when we are ready to move on. (potential income property #2)

But I have no clue how this would work as far as getting a loan is concerned.

So is it even possible to pre-qualify for a loan in the new location if we are planning on keeping this home and using it as a rental?

Are the qualifications different when purchasing a second home?

How do I go about finding a good lender/consultant to help guide me through this process?
Posts: 6101 | Registered: Jul 20, 2009Reply With QuoteReport This Post
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If you are going to rent here, rent there. If you are going to sell here buy there. Helps keep financials in check.
Posts: 9191 | Registered: Aug 14, 2007Reply With QuoteReport This Post
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I own and like rentals, but you said another state, that usually doesn't work well. I live close to the properties I manage myself. I also have a list of vendors I can call and send out without me even needing to go there. But I wouldn't want to be out of state, can you afford to hire a manager?
Usually a lender will want you to have income to cover this "rental" and your new purchase.
Posts: 2438 | Location: Southern CA (Southbay) | Registered: Nov 08, 2005Reply With QuoteReport This Post
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Thanks for the feedback. We may try to do a rental property someday in the future, but given the very generous relocation package- including help selling this house and buying another- we have decided to sell.

I suppose that I was having a hard time letting go of this house. Too many ideas I had for improving it (which will have to go on hold) and we just got the solar panels installed. (they are part of a lease program so we will not have to lose money there).

Right now I'm changing gears and working on getting the house ready to sell.

But meanwhile.... I have another related question:

Right now my adult daughter, her husband and baby are living in the basement. They will not be moving with us.

So- on the chance that we move before the house sells (a likely scenario)- is it OK for us to let our daughter continue living in the house? She knows the drill about keeping it clean and available for showings- and it might work better to have someone living in the house than it being vacant, wouldn't it?
Posts: 6101 | Registered: Jul 20, 2009Reply With QuoteReport This Post
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I can only answer for me. It would make no difference if someone was living in the house or not as long as there wasn't stuff stacked around so that I could really see the house.
Posts: 6748 | Location: North MN & Northern AR | Registered: Oct 01, 2002Reply With QuoteReport This Post
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Tomatoqueen, Glad things have been resolved for you ~ selling the existing home now and waiting to do the income property later! Makes it much easier to decide what to do next and when...

As far as allowing your adult daughter, her husband and their baby to continue occupying the property after you leave, if it comes to that, while the house is on the market?

You might not like my response. You said they are living in the basement now ~ what are the chances that they will be tempted to "expand" upstairs once you are gone? You also said she knows the "drill" about keeping it clean and ready for showing at all times so, if all of that is true, then I see no reason not to allow them to continue to live on the premises while it is on the market.

A lot of pluses, actually, keeping the house clean, the grounds/yard/landscaping tended and the mechanicals working and someone on site to over-see it all BUT you will to have a serious agreement and understanding with them if you choose to take this action. NO MOVING UPSTAIRS and everything, including the basement, is to be "show-ready" at all times.

In my experience, people will agree to anything when it suits their purpose. Are they living there "rent-free" right now and will be when you leave? And, after a while, it becomes easier and easier to let things slide a bit, until they actually begin to resent your efforts to maintain your home from long-distance while it is for sale and, instead, mistake it as interference in their lives.

BIG RED FLAG HERE, OP, But one you can solve with some serious "sit-down" conversations between the four of you (that you put in writing) BEFORE you make that decision. Good luck and let us know how it turns out. Cool
Posts: 6487 | Registered: Jan 01, 2008Reply With QuoteReport This Post
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TQ, don't know your daughter or the backstory so hope you don't mind a few frank comments -

I would think of your daughter as a tenant and ask her to begin searching for a new place with the plan to move out in 30-60 days. Why?

IRL, tenants (especially those with sweet deals), subtly/subconsciously or otherwise, sabotage sales. In addition, it's difficult to show and maintain a property with small children. Besides that, some buyers may not want to displace her family, when they understand the situation.

If you execute an agreement with them, I would require them to have the property show-ready, i.e. clean and staged, and that they vacate the premises at that time.

If your daughter moves and still lives in the area, perhaps you could ask her to drop by frequently to check on the lights, cleanliness and staging, etc. - maybe in exchange for all the babysitting you've probably done! (BTW, it's my understanding you're relocating to OR and will be out of the area.)

Anyway, that's simply MHO, based on my experience.

Good luck with everything!

This message has been edited. Last edited by: BearCat49,
Posts: 168 | Registered: Sep 21, 2012Reply With QuoteReport This Post
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