All Forum Posts by: Bradley Padula

Jeff, good for you for thinking ahead. Talk to lender(s). Ask them for what you can afford under both scenarios, 1st being max loan amount they will give you based on your current situation with the monthly car payment, 2nd being max loan amount they will give you if you were to have no car payment. They will be happy to speak with you and this is a good chance to build your network of lenders. Then you can make an educated decision versus guessing

For the lender it will be a simple DTI calculation where one scenario has the car pmt factored in and the other scenario does not. Take your fico score and deduct 20 or 30 points from it to be conservative. Tell the lender(s) to use that in this proposed scenario. Don't do any hard credit hits in this case. There are many lenders who will do this for you w/o a credit hit.

While $4k may seem insignificant in the scope of real estate, that could cover all or most of closing costs on a property of with a low downpayment FHA loan or a 5% down conventional on a single family, a chuck of the downpayment. Do your research before you dump all the $4k into the car loan. Think to yourself, if I drop all 4 grand into the car loan, how long will it take me to get that $ back via savings from dayjob etc.

Not sure what interest rate your car loan is, but if you keep the loan, you could always look into refinancing into a lower rate if possible, or selling that car and using the proceeds to buy a less expensive car outright, where you'd have no loan/monthly pmt

Good luck and if you have any questions keep em coming!

The HUGE difference between FHA and conventional for multifamily is FHA you can do as low as 3.5% down on up to a 4 unit property, whereas with a conventional loan you're looking at 15-20% down. You should talk about this with your lender and research online to learn more

I would recommend using a GOOD real estate agent. In regards to the investor real estate agent you mention, think of a list of questions to ask him / any other agent you may want to use. See how their online reviews are. Ask him, why should I use you / why do I need you? 

On the buy side, it doesn't cost you anything to use an agent (they make money off the seller-paid commission, split between selling agent and buyer agent), so the thought is, why wouldn't you use an agent

If you don't use an agent, how do you get MLS access, how do you get lock box code to get into house for showing, how do you know all the documents and contracts and deadlines needed, etc etc. You need a professional on your side, and with that comes their experience, familiarity with the real estate transaction process, their network/knowledge, licenced realtors act as fiduciaries etc

One of many good reads pasted for reference 

https://www.biggerpockets.com/...

Congrats! Don't get hung up looking for a 4 unit. If you're in the 3 to 4 unit range, and your proposed loan type is FHA (assuming it is?) versus a duplex, make sure it'll pass the FHA self-sufficiency test. Also, FHA inspections are different (more stringent) than conventional mortgage inspections. Research FHA inspections and the main things that would potentially cause an issue (can range from missing handrail, to peeling paint, etc). Once under contract, a handrail is an easy fix for example versus correcting peeling paint) Some multifamilies listed for sale specifically note "No FHA buyers" because they know it won't pass the inspection and/or the seller doesn't want to remedy the issue that an FHA inspector would list on the report, vs a conventional appraiser would would not.

In the meantime, be careful taking on debt, opening up new credit cards, bank accounts, buying a new car etc as this could impact your credit score & debt to income ratio come time for the loan, and in turn could affect your interest rate / how much you can borrow. Best of luck!!

Hahah no worries, exactly, whatever gets the clothes clean!

Combined washer & dryer units are generally $1000 - $1500, would cost the same or more than separate units, and generally have smaller washer space and smaller dryer space. More uses needed to do same amount of laundry = more wear on unit. You'll generally see them used in confined spaces, small apartments etc. 

@Justin Rea a service call to diagnose the problem can range in price but usually costs around $75-$100 just to get someone out to look at the problem, let alone fix the issue. Smart money would be on the replacement like you are thinking. Amana / Roper washers and dryers are work horses and I've had good luck with them in the units I have them in (reviews online speak for themselves). If you're looking to go higher end / more features, I also have a higher end Electrolux model EFLS627UIW for another unit, I got a really good deal on it and tenants love it.

@Seth Foltz any specific models of washers you're seeing 15 year warranty on for Maytag or Whirlpool? From what I've seen, Maytag is up to 10 year limited, and Whirlpool is 1 year 

@Zack Stevens Congrats on the purchase! This seems like one of the times spending the $ to ask a local attorney will be well worth it. I'm not sure you'll get a cut and dry answer in this forum. I'd talk to an attorney first thing in the AM to get a (legal) course of action together for how to deal with the items. What you don't want, is you get rid of all the items then the former owner sues you the value of the quad, mower, ladder etc

IMO your agent should have done a better job with pushing to have the house broom clean and empty of personal belongings before you went to the closing table 

Also, the condition of the house being a disaster is your issue now since you did your final walk through and, after seeing that, signed on the dotted line to close and purchase the property

Interesting write up. Saw your other post on Recasting. I think its cool that you think of uncommon / not highly discussed topics and share them on the forums 

I think the phrase you used "backwards emergency fund" sounds very fitting in this case. Many people would rather have their emergency fund in their bank account, than trapped in a prepaid mortgage payment

Peace of mind from being one payment ahead is understandable, I have done this myself in the past, it provides a buffer in the event there is an auto pay issue or human error if manually paying. I don't think I would feel any better being more than one payment ahead since I know the opportunity cost of locking the $ into prepayment, versus using the $ for additional investments that would yield more than the mortgage interest rate (Dave Ramsey approach as noted by @Steve Morris)

I'm thinking of the time value of money and the opportunity cost of fronting thousands of dollars on mortgage payments months in advance when the only tangible benefit received is seeing the "next payment due" date get pushed farther out online while bank account balance decreases. I get the peace of mind / better sleep ideology of being a payment ahead, but how much better can the sleep and peace of mind get after 2,3,4,5,6 prepayments

Refinancing while its still an owner occ seems like a no brainer

Sounds like your current lender is offering you a Streamline Refi. If it is, your existing upfront MIP (the FHA fee you refer to) in your current FHA loan (if you rolled it into your current loan), a portion will be credited against the new MIP you roll into your new loan. There is a decending scale based on how long you've owned the home. I believe they use the purchase price as the "value", so it doesn't really matter if the home has appreciated at all if you just care about dropping the interest rate / payment

https://mymortgageinsider.com/...

Either way, you'll likely still have closing costs so keep that in mind as you work through the math. Probably somewhere in the $5k to $8k range. 

I did a streamline refi on a duplex in MA and went from 4.5% to 2.875%, easy process particularly due to no appraisal needed (less disruption to you and tenants) and no income verification etc (less docs to submit). 

Nice work @Andrew Chapman !