All Forum Posts by: AJ Wong

We just had an conference call on this and a wrote a forum post yesterday about this exact circumstance and loan product..check in with @Joseph Chiofalo

HI Natalia, we specialize in STR investment homes. What is the purchase price? Proposed carrying costs?

HI Dallas. You can use an FHA loan to live in one unit and rent the others for up to 4 total. You can use the income from the rental units to qualify and minimum down payment is 3.5%. You can try to incorporate a seller concession to help cover closing costs and reduce cash to close. There are several housing grants available for first time and qualified home buyer's. Check in with @Joseph Chiofalo they're a FHA/VA lender and also have some 100% programs if it fits into the parameters. Good luck!

Welcome! Congrats on the portfolio..let's go fishing! 

Even though it's private the sellers note will be recorded as a lien against the home. IE: title search. Generally a HELOC is second position and might have seasoning requirements (ownership of 3-6+ mos) you would need sufficient equity to essentially 'recapture' your down payment.

Any real estate professional knows..it's not closed until it's closed. 

Getting to contract is one step, the real work begins with getting to the closing table. As an investor focused buyer's broker I spend the majority of my time helping buyer(s) assess properties both before and after their offer is accepted. 

Since rarely are properties on the Oregon Coast (or anywhere for that matter) in flawless condition, generally post receipt of the inspection report there are items of concern that buyer(s) will want repaired or compensation towards. The biggest challenges? Decks. Foundations. Roofs and 'lesser' critical home hardware like HVAC, AC, plumbing and non functioning lighting and electrical. 

My approach is two fold:

- Gently keep in mind and remind clients there are two parties and perspectives involved.

- Address buyer's concerns with reputable local professional and expert evaluations and written estimates.

For example if the deck needs to be repaired or replaced, during the contingency period I'll attempt to have at least 1-2 licensed contractors provide written estimates. This dually provides evidence and reassurance to the buyer of hard anticipated costs and a written estimate to support and help validate the buyers request to the sellers. An ineffective strategy and contradictory to fiduciary responsibility is to suggest or guess. Sometimes market conditions can limit buyer negotiability, but overall I try to emphasize focus on repair items that would be of concern to any prospective buyer/investor. 

Sellers concessions are an excellent tool to close 'smaller' repair gaps as they help reduce the buyers cash to close and increase capital reserves for anticipated costs beyond closing. Another great tool is to incorporate a quality home warranty (paid for either or both parties) to alleviate some concerns about items that are functioning but not failed. I've found that accurate assessment with sufficient third party support can often help parties find middle ground. 

How do you address inspection issues or red flags? 

There's nothing wrong with a leasehold..with the exception of financing limitations. Assuming it is a cash transaction but if you did ever want to leverage, limited lenders that will lend on leasehold. 

Check in with @Joseph Chiofalo though..they have a few investors that provide lending on lease holds and/or work with foreign investors nationwide for conventional title. Sounds like a healthy deal.  Good luck! 

 Do you have RE representation? A 50% discount from listing price could seem a little unrealistic..but I would not discourage any offer..As for expenses I would request copies of the sellers formal statements or records. If not prior to offer, typically a review of financials is part of income producing property or commercial transactions. Sellers need to provide certain records, as  requested as part of the contract within a due diligence period. If the buyer doesn't like what they find or seller is unable to deliver, the buyer can terminate. 

You're missing the debt obligation of $875k @ 7.2% interest $5939x12= $71,268. $40,732 mins expenses..At a PP of $1.25M with 30% down ($375k) you'll be short of a 10% COC return..

Also 7.2% seems like a very strong rate on a 10plex. Check in with @Joseph Chiofalo for 5+ unit loan programs. Most small balance multi family complexes will not yield a 8%+ CAP in today's rate environment..unless they will consider seller financing..with 30% down there should be some options for creative finance solution. Good luck!

HI Kurtis and congrats on the investment. You can do a cash out fixed equity line or second home loan towards the down payment of a new investment to keep your current terms intact. If you're purchasing a new primary you can tap an FHA loan for 1-4 units with 3.5% down, if you can secure a seller concession it could limit the amount of equity needed..if not a new multi family primary you'll need a larger downpayment (15-25%) depending on the property type and occupancy. You can also secure a first home loan against the new purchase and a second against the current rental as a simultaneous closing for a higher LTV.

Check in with @Joseph Chiofalo for help with structuring and evaluating several options. He's nationwide and excellent with investors. Good luck!