Buying or Selling a Home/Buying a 2nd home

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Expert: - 4/9/2007


Question
Hello Russel,
I would like to purchase a 2nd home and Lease the first one out to my mother. What do I need to do to get another mortgage?

Answer
Hey, Marie.

With the current mortgage problems resulting from subprime loans during the past few years, getting another mortgage will probably be more difficult than it has been recently.

Traditionally, it has been difficult to prove an ability to pay both mortgages when you don't yet have the first property leased since that lease income can be important. It also has been difficult to prove that ability when your intent is to lease to a relative since it is common knowledge that landlords are not as strict when leasing to relatives.

The best thing to do is to search for the best mortgage lender who will work with you under the leasing conditions you are wanting to do. In this real estate market, you'll probably also have to have all your ducks in a row when you go to make a purchase offer on a property. That will mean having a loan pre-qualification letter from a well-known mortgage lender.

There also is quite a lot of private money out there from rich folks in other countries, such as those from oil-producing countries. Traditionally, private money loans have a higher interest rate, but if you need them to get started, you can always refinance sometime in the future, paying off their loans and getting a more traditional loan from a more traditional lender. The best place to find private money is at your local creative investors association. Those are the people who look for "creative" ways to use their money in real estate. And a loan that a traditional mortgage lender doesn't like can be one that the creative investor does.

So you can do it, and in this marketing it might be difficult, but it's not impossible. If you have a mortgage on that first home, approach them first since you have a track history with them.

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Russel Ray

Expertise

Through home inspections, I provide an education about real estate. I'm one of those rare home inspectors who has been involved in real estate in many different capacities: as a Realtor (in Texas), as a property investor/flipper, as a teacher, and as a marketing expert (for Realtors and home inspectors). I believe that my experience as a Realtor and property investor provides me with a different viewpoint about home inspections in that I work for my Clients, but when there are other people involved in helping my Clients, then I firmly believe in helping them, too. That includes Realtors (both the seller's and the buyer's), repair professionals (e.g., plumbers, electricians, etc.). If I can get all the players (seller, seller's Realtor, buyer, buyer's Realtor, and repair professionals) playing in the same sandbox together to accomplish goals as a TEAM (Together Everyone Accomplishes More), then I believe I have succeeded in my job as a home inspector. My profession is, in my opinion, much more than simply documenting the condition of a property and then take the money and run. I am also a rare breed in that I don't believe that one inspection fits the needs of all Clients, and I have led the industry in understanding that fact. For example, the goals of a property investor are far different than the goals of someone buying a property to live in. The goals of a seller (a pre-listing inspection) are far different than the goals of a buyer (a pre-purchase inspection). To that end, I offer 14 different types of inspections, e.g., STANDARD, LIST, RENTER, BASIC, MAINTENANCE, SPOT, and more. I believe in giving the benefit of the doubt to all professionals in whatever industry they represent until they prove me wrong.

Experience

Over 42 years in all aspects of real estate--building homes, renovating homes, inspecting homes, Realtor.

Organizations
National Association of Certified Home Inspector, Better Business Bureau of San Diego

Education/Credentials
Graduate of Texas A&M University; College Station, Texas

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