Buying income property (1 Viewer)

[SteveMc]

My fiance and I are toying with the idea of buying an income property to rent out. We rent an apartment now, so ideally we'd love to get a duplex, live in one side and rent the other out. However we're both young (25) and my jobs haven't been steady for a year, so I don't know how that would affect getting a loan for one. ANyone have experience with this stuff. Also one concern I have...I have great credit, she however does not. While we are soon going to be trying to clean hers up, we don't exactly know how bad it is yet and it won't be clean by the time we get married. Will lenders accept one person on a loan but figure in both of our income?

 

[ken thompson]

If the finance company is to consider both incomes, both people will need to be on the note. I dont know how bad your fiance's credit is but short of currently being in bankruptcy you'll get a home loan so long as its is your primary residence. Granted It'll cost you more. If you live in the duplex the finance company will consider it more of a "residence" loan rather than an "income producing" loan. The terms should be the same or very similar to a standard residential mortgage loan.

 

[Ashley Seymour]

Will lenders accept one person on a loan but figure in both of our income?

They most likely will not.

Apply for the loan in your name. You can deed an interest to her after you take ownership are are married.

Because you will live in one side, the lender may make you a loan with a down payment reflecting owner occupant terms. If you can only afford 5% down you would have a hard time financing as strictly income only property.

One advantage to the duplex is that the lender will take into account the rental income on the other side less a factor for vacancy and maintenance. In simple terms, if you were purchasing a $150,000 duplex (scale up or down to reflect the price in your area) it would be as if you were attempting to qualify for the purchase of a $75,000 home.

It gets a lot more involved so check with a mortgage lender, realtor, and attorney.

 

[MarcVH]

So, an unmarried couple, one of whom has poor credit and the other lacks a stable income. Clearly this doesn't make you ideal candidates for what you're proposing.

If you want to do this jointly as an unmarried couple, you'll need an attorney to draw up an agreement on the terms of ownership. There end up being all sorts of contingencies (e.g. what if you buy it, then break up?) Also be aware that a joint offer on a home from an unmarried couple will be regarded less seriously by the seller, because unmarried couples are more likely to flake out before closing.

Also, you need to be sure that you really want to become a landlord. I can't speak to your area, but in many places low mortgage rates have caused a lot of people to buy homes, and the result is that landlords are having a hard time finding tenants. Look through your Sunday paper at apartment rentals, looking for things like "Move-in bonus!" or "First month's rent $1!" that indicate you should run away.