All Forum Posts by: Norberto Villanueva

@Andrew Postell - thanks for clarifying there being no due-on-sale clause with FHA loans.

I stand to be corrected but, it's important to note that residential FHA as well as VA loans require the borrower simply show intent to live in the property initially, after which they may be able finance a new primary residence, keeping the first as a rental, along with its original financing. Assuming FHA was used for the first, the new primary residence will have to go Conventional or VA, if eligible. Conversely, if Conventional financing was used they'll have to use FHA or VA financing as appropriate. 

Interestingly, the VA allows borrowers to have more than one mortgage, which will accommodate a primary turned rental and new primary scenario, so long as the borrower's entitlement has not been exceeded.

@Bryan Wilson - @Wayne Brooks is correct, a true assumption will require the FHA's blessing and have some limitations. https://portal.hud.gov/hudportal/documents/huddoc?... And where talking to the lender may work out, it may also fail by triggering the due on sale. 

Assuming you are being creative because traditional financing is not the best option, a subject-to, a lease option or even a master lease may be the best ways to go. 

I'm no attorney and this is not to be misconstrued as legal advise but, it is my understanding lenders rarely if ever invoke the dreaded Due on Sale Clause and there is no Due on Sale jail even if they do. The mortgage simply becomes immediately due and payable, at which point you must pay it off one way or another.

Hope this helps.

@Wayne Brooks

@Mitzmichael Sumilang - Too bad the market's so tight. I'll continue to keep you in mind!

@Drew Oesterle - thanks for posting. It's always advisable to have boots on the ground, the proverbial dream team when investing outside one's backyard. Feel free to connect if I can help with any resources in the Colorado Springs or Denver market.

@Patryk Sikora - thank you for posting. With rental rates showing signs of stabilizing, many are fleeing the higher (not inflated) Denver prices for better returns in Colorado Springs. 

All the best.

@Patryk Sikora - thanks for posting. I understand the New York rental market is somewhere between flat or declining, where Colorado Springs' is somewhere between 7% - 8%+ growth. 

Hope this helps.

@Steven Fair - thanks for posting. You've surely come across the importance of putting together a dream team and the importance of there being a licensed and experienced real estate broker on it, one who specializes in investment real estate. Make sure they (and you) are intimately familiar with cap rate, net operating income, cash on cash return and most importantly, return on equity, all key metrics in analyzing potential buy and hold deals. Also, where current market values and rents are and a feel for where they're going is crucial to knowing a good deal when you see one and will help you execute when the time is right, which you must do above all else. 

To your success!

@Farakh Zaman - thanks for posting. The first question that comes to mind is, what are your goals and expectations for ROI?

In the strong seller's market we're in, a "good deal" is one that provides enough income to cover all expenses with enough left over to provide the investor an 8%+ Return on Equity (ROE) https://www.thebalance.com/return-on-equity-in-rea.... 

Yet with most investors, the expectation of a "10% cash on cash return" or better is a common denominator, when that beast is in hibernation, waiting for the next crash to occur so, they pass on what appear to be paltry returns, missing out on growing their wealth by 8%+ a year or better each time. And this is without taking current appreciation averaging 11% in Colorado Springs into account, which in some areas is upwards of 20% year over year, meaning they will likely pay $240k next year for the asset with a $200k ARV, projecting a "measly" 8% ROE today.

As for giving up on buy and hold. For those that can, it is the most viable solution for building long term wealth, especially in a strong seller's market because, unless one can meet or beat the $10k a month marketing budgets the successful ones implement, there's just not enough meat on the bone to make wholesale and/or flip strategies work as consistently. 

Hope this helps. All the best.

@Account Closed - thanks for posting. Here is their site: http://www.aacshq.org/.

All the best!

@Cody Hyman - thanks for posting. Where property in surrounding homes are likely to face an increase in value due to being in the path of development, those that end up being directly on (or soon to be) major roads will likely face a decrease in value for numerous reasons, not the least of which being a presumable increase in traffic in what was once their quiet backyard. 

Should property be condemned for eminent domain, the process by which municipalities have the ability to acquire land for "public good", the owner of the property "must be given fair compensation after a "due process" in which a commission of "impartial" landowners or a jury (landowner's option) determines fair market value. https://eminentdomain.uslegal.com/state-laws-on-em...

Generally speaking, the ability to split a parcel to add an additional residence is the mother of all value adds. However, with too many moving parts to consider, the second part of your question requires considerably more information to properly address, such as the property's location, its current zoning and density requirements, existing covenants, etc.

 All the best!