All Forum Posts by: Carrianne Mucho

@Brandon Colar You are off to a great start and have received some excellent advice.  Books and the podcasts are a great start but before you jump into multi-family investing, I would seek out local property owners to interview.  Find the type of property you want to invest in (not for sale) and seek out the owner; especially if they've owned it for quite some time.  Offer to buy them a cup of coffee and pick their brains, but be respectful of their time.  You will learn so much that is specific to your local area and perhaps even get some great referrals for handymen, property managers, tax consultants and other contacts who will be crucial to building a team that will make you successful.  

@Alex Ascencio - If you have 20% down, FNMA Homestyle loan may be a good option for you to purchase and make repairs on a fixer for a buy and hold or a flip. The loan is based on ARV (after repair value) so you have an escrow hold back for improvements instead of using cash. Unlike FHA 203k, you can be an investor as long as you have 20% downpayment. For a secondary or primary residence, the LTV (loan to value) can be higher. Be sure to work with a lender who has experience with these as it is a bit more complex to put together than conventional financing.

@Victor S. - Investor simply means non-owner occupied (not a primary res, not a vacation home).  

@John Reuther Homestyle IS available on investor properties. There are different LTV's for primary, secondary, and investment properties (SFR only).

If you need less than $35,000 in rehab costs, then you can likely do the FHA 203k Limited - more streamline than standard 203k but repairs must be <$35K.

In a competitive market, if there are no lender required repairs (ie; the property can pass appraisal), then you might consider doing a 203b to get the house, then you could refi immediately after closing to a 203k to do your rehab, but make sure you are clear on all the costs for both loans.  Lender might cut you a break for doing back to back loans.  

Good Luck!  

The Homestyle loan has both owner occupied and investor options (with different equity position requirements).

@Moshe H.  Thank you for sharing your experience!  You did a great job explaining pros and cons.  I'm sorry to hear that your lender didn't provide you with a total cost analysis upfront to help you fully understand the costs of each scenario and choose the one that is best for you.  Even though I don't do HELOCs, I provide this type of comparison for clients in similar situations to yours so I can advise them if a refi is in their best interest (even if that means I don't do a loan for them today).  As a very basic rule of thumb, for a refinance to be cost effective, the rate should be at least 5/8 - 1% lower than your current rate.  Of course, there are many other factors to consider but this is a good quick check. 

A Homestyle Renovation loan may be an option (although as others have mentioned, your available investment amount will be a limiting factor). The Homestyle loan is a FNMA single purchase money loan that is based on the ARV so can help finance repairs and renovation. Basically, you can purchase the property and an escrow account is set up to cover the renovation. Unfortunately, for investment properties, max LTV is 85% so it works a little better for owner occupied which can go to 95% LTV. Awesome tool for a house hacker! Also be aware that repairs must be completed by a contractor. Ask your favorite local lender about their renovation products to make sure you understand all the options available to you but understand that not all lenders offer renovation programs and not all those who do are good at them.

@Jelani Young, you have certainly found the right place to learn about investing!  Be sure to check out the podcasts if you haven't already.  It's a great way to absorb info about different aspects of investing while you are commuting, on the treadmill or whatever.  

Glad to hear you are happy with your relocation to Sacramento!  I'm just north of you in Placer County, but I also do work in Sacramento County.  Seems to me like it is a little easier to find values a little further from downtown these days. 

It sounds like you are considering a buy and hold strategy?  Are you thinking of looking for turn key properties, or fixers?  Looking forward to hearing your story as you progress.  

Benjamin Molina , the appraised value (which estimates current market value) is key to determining how much the lender will loan on the property. You asked a great question about additions though. My company offers a loan based on ARV (after repair value); so the appraisal estimates what the market value will be after repairs or other improvements are completed. For those who have a down payment, it is a great way to avoid paying cash for repairs, and hard money rates.

Joseph Yep welcome to BP! I'm in Roseville too, I love Placer county. I think you're already on the right path, buy and hold is a good strategy in our area (IMHO). Personally, I think the podcasts are great because you can listen and learn while driving, walking, treadmill, whatever. Perhaps I will see you around and feel free to reach out of you have lending or property tax questions. Much success to you!