Multiple-family mortgages

[beanmaestro]

Wondering whether someone can help with this…

My wife and I are considering our options for buying in a couple years when prices are near bottom. One of the options would be buying a duplex or a multi-unit house and splitting it with friends. It might just be two couples in a duplex, or it might turn into a mini cohousing operation in an apartment building.

I’m imagining that the two financing options would be for one family to buy the whole property, and rent it to the others; or for the group to qualify as joint owners. Is one of these options substantially easier to qualify? What LTV would likely be available in each option?

Thanks for any advice…

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[patb]

co owner is ahassle to operate but easier to qualify if there are more
people who have assets to back the play,

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[surveyor]

don’t

I don’t recommend it – too many hassles (and this is coming from someone who can handle hassles). You will need to basically write up a partnership agreement to make sure that everyone does their fair share, when you can buy each other out, etc. What if the other person loses their job, and then can’t make up their mortgage payment, you will have to pick up the slack, etc. Too many what if’s when you are by yourself and it gets worse when you involve other people, particularly friends and family (a good way to ruin relationships is to involve friends and family in money).

As for qualifying for it, it’s not too difficult if the property is less than 5 units. That will make it residential and the LTV ratios, income requirements, and other documentation are not that severe.

Honestly, I would recommend just trying to qualify for the property on your own and see where that gets you. Do the math, see what you can afford, etc.

Oh, and by the way, if you are thinking of buying anywhere in California, I doubt there are any four plexes or less that will work as good income properties right now (I’ve been seeing four plexes for around $650k and more. It needs to get around $500k before it starts working).

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[beanmaestro]

I’d certainly prefer to buy the place outright, and rent the units directly to our friends, but I’m curious how both options work. Let me know if the “common sense” is correct:

Single Owner: My wife and I would probably need to have X% down, plus 6+ months savings, and income about Y times greater than (annual PMI – Z% of annual rent for units we won’t live in). What are X, Y, and Z likely to be?

Partnership: Together, we have to put A% down with 6+ months savings, and prove income B times greater than PMI. What are A and B? And obviously, we have to be crazy enough to set up such a partnership.

[Author]

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