All Forum Posts by: Casity Kao

@Thomas Gerhart Each financial institution has their own interpretation of the 90 day flip rule as some banks count it closing to closing others closing to under contract. Always call the lender beforehand on the prequalification form to ask. We personally will accept an offer anywhere from 2-4k lower from a conventional buyer instead of dealing with FHA buyers. If you are rehabbing the best houses in your neighborhood and pushing a new pricepoint as we do this problem will never go away because some buyers will be savvy enough to know they don't want to be the most expensive home on the block. When we flip we try to price at a price we know will sell opening weekend, instead of holding out for a higher price. The market will bid it up anyways.

@Eugene Kolomiytsev If you want to go with a bank that does above 45% of gross income you will probably have to find a smaller lender. One of the banks we work with the banker is the underwriter, processor and loan closer all in one so we can leverage our relationship to get them to go up to 50%. More importantly you should find a lender that will work with rental income if you have any, and dive into specifically how they count alternative forms of income but going above 45% is rare unless you have a near reduction in DTI coming up, for example a pending sale of a property. Between my husband and I, we call on over 100 lenders a year. Winning the finance game is a big way of growing your business and we have attracted investors just off of our ability to find them funding in addition to their investments.

@Michael J Callinan  What we do at this time of year if we have a unit become available is offer a short term lease until June/July or rent it out on AirBNB because of the lack of quality tenants.  We find most tenants at this time of year that are looking are either out of towners moving or evicted tenants.  This is assuming your place is priced accordingly.  Come July we evict the tenants and find better tenants on a 12 month lease so we only lease June/July the best months of the year to find tenants.  If you would like to learn more about this strategy my husband discusses it in Episode 96 of The RPOA Podcast.  He was also guest 178 on Bigger Pockets.

https://rpoaonline.org/podcasts/99d1244f8ea1908e28b22abe4b76484f/

@Thomas Poloncarz Jr  Again your buddy should be making recommendations because if you are going to be making your realtor thousands of dollars they should have a lot more experience than you to guide you through your investing.  I personally like to generate a list for properties over 60 days on market, because these are the properties we will typically lowball offer on and will negotiate with us.  I actually don't care if it has a recent price drop because many relators have alerts for price drops as does Zillow, and I want the property that is mismanaged by the realtor that nobody is looking at to leverage walking away.  Easy to walk away from a buyer when there is a lot of interest.  Expired is along the same line and a good one as well, and we also like to call on rental listings on market over 60 days especially in winter.  A lot of realtors are bad about updating these, so a lot of dead ends but again empty homes in winter give sellers more motivation.

@Dan Craze The 60k pull should not affect your credit so greatly to the point it affects your ability to get a loan if you have a strong credit history or it's rate. Also it will take 2-6 weeks for it to even reflect on your credit report What you should be most worried about is the debt to income calculation. What you should do is get a HELOC off your primary home primary to moving out that has a long amortization and interest only payments then notify the lender you are using on the second property you will use the HELOC for down payment. They will then give you a prequalification assuming the minimum payment that would be owed on the HELOC for the down payment. Once you have an accepted offer that will ask you to make the withdrawal immediately to disburse to your account and provide a bank statement showing the minimum payment as soon as one is generated. The question of whether to pay PMI is hard to answer because it leaves you with more money to leverage but also cuts into cash flow. I would take no closing costs with a higher rate to keep more cash in hand and put the 20% personally but if I was cash strapped and did not perceive I could value add on the home enough to get my cash back out I would consider paying PMI but only at 10-15% downpayment depending on how much the PMI was based on the downpayment amount. If you have strong credit the PMI should not rise too much if you put 10-15% down.

@Richard Heine  Call more banks but you should have no problem getting 20 year amortization, and depending on loan size 25 year.  We do most of our loans in personal name to avoid balloons on 1-4 units and only commercial loans on properties greater than 4 units, and if we run out of liquidity then we blanket our 1-4 units altogether into one commercial loan to leverage better rates and pricing.

Hi Gino,

The bank should allow this as a seller holdback if it is a commercial loan.  If they don't find another commercial lender.  Why would you want the bank or title company to hold on to the funds for you?  Your second question on how it is disbursed depends on the lender but if you have a strong appraisal you should be able to get seller holdbacks for repairs to be disbursed at closing.  For example if you had an appraisal for 1 million, you put 20% down, the bank should have no problem with disbursing $50k in seller holdbacks to help with repairs.  Some banks will even allow seller holdbacks of a years worth of maintenance, lawn care, and operating expenses if you have a high debt service coverage ratio and strong appraisal.

@April Molina  @Thomas S. is correct.  It is a farce.  If the tenant becomes a nuisance and you have to evict the tenant for cause it will only become more of an issue and you still have to return unused rent.   In my areas a lot of renters will offer this to get your attention and avoid a background check but they are the worst of the worst and you are just putting off a big problem in my opinion down the road.  I would only accept it under certain circumstances e.g. out of country tenants.  I have had good luck with these tenants because of lack of history.

@Samantha Soto  We have done this before but honestly I would run your business now as if you would run it with 20 properties.  Do you really want to be checking to see if your tenants pay every two weeks, then if they are late with one payment but make one you have to go back and carefully show them how they missed a payment.  If the tenant struggles to pay rent because they cannot budget and this is a problem then I would just upgrade the quality of the property you are renting.  This is only going to be more headache as time goes on.

@Melissa Taylor  It depends on what you mean as steady.  If you are planning on flipping homes or buying rentals throughout year for your portfolio I would say it is more than worth it just make sure you choose the right broker that does not have high monthly fees.  Also if you want to do real estate part time, then the hours you must make available are weekends and after work Monday-Friday. If you can't be available at these times it's going to be hard when clients want to see houses and you are not available.