All Forum Posts by: Andy Chu

This is a Fannie Mae Matrix
https://www.fanniemae.com/content/eligibility_information/eligibility-matrix-082112.pdf

Sometimes, the lender overlay additional requirements to mitigate risk. However, in this instance, that is not the case.

It's time to look for another broker .

This is one of the hardest things to do because I am personally in the industry. Once you are proficient in something, for some odd reason, one feels that no one else can do it better than yourself.

With that said, we have several properties in different states and it comes down the following items that will lead you to the right path.

First and foremost, EVERY location will have a good deal somewhere. So it is essential to find the right team. I'm assuming you are looking for a buy and hold property aka long term rental.

Finding that property. The following questions are good starting points;

1. What is the Days of market for rents in the neighborhood aka vacancy rate
2. What are the current rents in the area
3. What repairs are needed in the short term and possibly long term
4. Who many people are on your property management team
5. What is your average turn over for properties

I'm sure there are hundreds of other questions that can be asked.

Another thing to take into consideration is that you are using the property as an investment tool. It doesn't make a difference whether or not you see it. Treat it as an investment and ensure that it is in habitable and comfortable for your tenants.

Good luck!

Back to the original question at hand. Go back to the basics for investing in real estate. CASH FLOW or APPRECIATION.

If you are going for appreciation/gambling, then open any real estate article and they will tell you the highest appreciation that happened in the previous quarters.

If you are looking at cash flows with good returns, find low key places that have historically double digit returns.

Is there any reason not to go 20% down conventional financing? Since you are putting 20% down, it eliminates PMI (Private Mortgage Insurance), which is the same as the FHA MIP (Mortgage Insurance Premium). FHA loans have an upfront fee that is attached to the back-end. Lastly, they have more guidelines to determine what is "habitable" conditions. If you need to fix the property, it is better to go Conv or go straight to the FHA 203K loan (light rehab loan).

You are always welcome to ask, however, I have NEVER seen the lender replace any appliances at the buyer's request.

We hold our properties in LLCs. Once we purchase the property, we transfer it into the LLC. I know there is a due on sale clause, but its no different from transferring into a living trust or other entity. In other words, we roll the dice on the due on sale clause. I cannot say that it has never happened, but I do not know of anyone that had their loan accelerated.

The pros of having an LLC is that in the event of a catastrophic event in your LLC, it will not roll to other properties.

The cons is that an LLC does have an annual fee plus another tax return that needs to be done.

Jeff Bridges you are pretty close in their assessment. FNMA's policy is not to negotiate too low of a number. Typically, to get to around 92% of value, they will need supervisor approval. Once a price reduction is in place, they firm up their % of list price.

There are a couple of caveats though. First is that pesky 60-90 DOM (days on market), after they hit beyond 90 days, it is considered an aged asset. They will start to be more aggressive in accepting below list price.

Depending on certain locations, they will start sending to auction. This is their liquidation platform, where they will accept about 65-70% of their BPO value (not list price).

I've seen asset managers not accept 90% of list price but turn around to auction and accept about 70% of list price.

keep in mind a lot of lenders will not lend beyond 95% of CLTV (combined loan to value). you may need to close first, and then take on that second loan. I don't recommend this option. talk to your first lender and see what their cltv is .

Phillip Dwyer Is this still going today?

REOs are NOT assignable. However, you could place the property in an LLC and sell the LLC or you could place the property in a trust and change the beneficiary.