All Forum Posts by: Charles Xia

@Lemarr Chambers I don't think that is how the rule works... Just to be clear lenders will consider a home an investment property if you are buying another house within 50 miles of your primary residence. There is no rule that says you can't buy within 50 miles of your primary residence. And obviously you can't really have 2 primary residences because thats not how primary residences are defined. You can always get a secondary residence in another state or further than 50 miles. However you should always check with your lender on these rules.

@Redi Yib Welcome to Bigger Pockets and congrats on starting your Real Estate Journey. To answer some of your questions on how I first started out. You should first get a good feel of the mortgage numbers and what will and will not cash flow. Here are my first responses to newcomers:

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First, work out the numbers.
Let me point you to a mortgage calculator to start.
https://www.google.com/search?q=mortgage+calculator&oq=mortgage+&aqs=chrome.0.35i39j69i57j46j0l4j69i61.1156j0j7&sourceid=chrome&ie=UTF-8

If you find a home for $500k, you put 20% down ($100k) for a mortgage of $400k. Assume your mortgage interest rate is 4% for a 30 year fixed which is a little higher than the standard rate currently (its safer to assume a higher rate) The monthly mortgage payment is about $1910 just for the mortgage. This excludes property taxes. Property taxes in NYC is about 1% of the property value for the year. so 1% of $500k is about $5k. To add it to the monthly mortgage payment ($5000/12 = $416.67) Totaling a monthly payment $2326.67. This assumes you find a 2 family house for $500k which is highly unlikedly in corona. I start at $500k because its easier to scale. If you saw a $1M house you can double the monthly payment to estimate $4653.34.

I would say to start figure out what your budget is and what you and your husband can afford. Find a good real estate agent that knows how to work with investors and familiar with the numbers and rent roll for the property to cash flow.

And always, dont rush. Take your time to understand the market. No deal is better than a bad deal!

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Once you start analyzing a lot of deals you'll get a very good feeling on what the monthly payment is going to be based on the purchase price. This is a great place to start.

After that you can start looking for things within those price points and zone it down by neighborhoods. Neighborhoods and states differ a lot in taxes which is another major cost that will impact your monthly payment. You can search for the property taxes on specific property which takes a little bit of work. If you work with an agent the MLS listing will have the property tax information too.

After knowing your monthly payment you can guess what your monthly rent could potentially be depending on the number of units and that will help you scan for properties really quickly.

I hope this helps,

Happy Investing,

Charles

Hi @Yanna Almonte,

Just to clear up the phrasing for @Madelin Mendoza, TECHNICALLY renting bedrooms out is illegal unless you're designated as "single-room occupancy" or a hotel. What you can do is charge a very high rent for 3 bedrooms that breaks down to $800-$900 a bedroom and have 3 people sign a lease that's $2400-$2700. They can figure out that it will be $800-$900 a bedroom. Just be careful on how you phrase the lease.Phrasing by the bedroom is illegal.

To answer your other question about foreclosures, I would strongly advise against it. There are a number of things that can go wrong with foreclosures and if you're not comfortable with the process and aren't educated enough about it you can get really screwed over it.

1. Foreclosures need to be paid with in all cash and your renovations also need to be in all cash. A bank isn't going to give you a loan on a property that is foreclosed if the bank can't see it. And yes most of the time its sight unseen and you don't know how much you will need to pay for the renovations costs especially if you aren't familiar with contract/material pricing.If you need to fully gut a 3 bedroom house it can cost $50k-$100k.

2. Lets say you do get the foreclosure and pay all cash for it you need to find contractors that you don't have. You might get desperate and the contractor can do a terrible job or disappear and you can't really do much about that. If you don't pay the contractor they can slap a mechanic's lien on your house.

Buying a foreclosure might be a good idea for a first time home buyer if they can rehab themselves or people who worked in construction and have a good contracting team.

I hope this helps,

Happy Investing,

Charles

Hey @Abel Curiel Nice to see you on here again ^^

@Madelin Mendoza You can start getting a feel for the prices. You can go on zillow, click on the neighborhoods pick a house. Break down the prices. You'll soon see that anything with the $500-$550k will have around the same monthly price ranges. anthing from $600k-$700k will hvae the same monthly price ranges. The variables that come after are different neighborhoods have different yearly taxes which won't affect the mortgage payment too much.

If you like Corona a lot and have family in the area, i'm sure they wouldn't mind if you moved 15 minutes from Corona. What I did when I started is I would start with the neighborhood I was interested in. In your case maybe I would spend a week looking at Corona, if I didn't find a good place there I would look at my next neighborhood of interest lets say Astoria and look at those for a week. Eventually you get a really good feel of of prices at that point.

I hope this helps,

Happy Investing,

Charles

@Billy Archer

Nice! Seems like you know a lot about it already. From what I remember I think some coops try to keep a ratio of investors vs non-investors or they don't let investors buy up a certain percentage of the coop or something?

Seems like you know the whole process and the risks with it. I actually didn't know this was a niche so thanks for your response! I personally didn't like coops and some agents I worked with didn't want to help me get a coop at all because of all the work they have to do digging through the coop board... Some coops have some sneaky boards...

I have brought some people to look at coops and it just seems like you have to do your homework on the coop board before you buy the foreclosure? I also tend to stay away from the coops because of the very high fees... I wanted something to cash flow right off the bat without the paying so many fees all the time.

Do you think you think coop investing is worthwhile in your opinion? Isn't is harder to sell the coops in general? Do you think coops are a long term buy and hold play?

Best,

Charles

Hi Billy,

Seems like you already have great experience in real estate already. Coop/Condo investing is certainly doable. Here are some roadblocks on coops that I know of.

1. When buying a coop you have to get the coop board's approval . This just means you might not be able to buy any coop you want.

2. Coops in NY generally have very high fees. You should look at the cash flow numbers. If a coop rents out for $2000 a month but the monthly maintenance fees are $1000 a month you only have $1000 left to cover your mortgage. You might have to pay for some utilities and that all just depends on property so make make sure it fits your investment needs.

3. Foreclosed units also generally require all cash... You don't get to see the property before buying it and there's inherently a lot of risk in that.

Are you refinancing because the rates are low now? Are you doing a cash out refinance? Cash out refinances might not be the best at the time but it all depends on your situation which I don't know.

If you have any other questions feel free to message me.

I hope this helps,

Happy Investing,

Charles

Hi Julian,

A few things... A few points I would like to make. Do you have all of these LLCs set up or are they just what you intend on doing?

1. If you want to buy a property using an LLC you need to get a commercial loan. Commercial loans usually have higher interest rates and higher down payments. You should speak to the lender on what rates they currently have but I highly doubt it they will give you something under 30%

2. You are unlikely to get approved for a mortgage if you don't have a source of income. I would like to present two cases. First case is simple, you try to get a loan for a property without having income you would simply get rejected. Second case is you set up an LLC or already have an LLC and try to get a commercial loan with the LLC. If the LLC doesn't have income or a history of paying their bills back on time they won't approve you for the loan. What you can do then is personally sign or guarantee that you'll pay the debt back (I forgot what the legal term is at the moment) and you can't do that either because you don't have income.

To answer your questions leaving money inside an LLC for 2 months isn't going to help you get a approved for a loan without income. To answers some of your other questions lenders look at 2 years of financial history. All bank accounts and debts(credit cards, car loans, any other loans you may have) under your name for the last 2 years.

Some advice, find a new time job and work for at least 2 years and commit to learning more about real estate. It takes time to figure all these things out and you want to be fully prepared for when a deal comes across your table.

I hope this helps,

Happy Investing,

Charles

Hi Madelin,

I was also born and raised in Queens, NY and lived in various neighborhoods. If you are targeting Corona you will probably have to pay some money out of pocket because rent for 1 unit in a 2-family would not cover the entirety of the mortgage.

First, work out the numbers.
Let me point you to a mortgage calculator to start.
https://www.google.com/search?q=mortgage+calculator&oq=mortgage+&aqs=chrome.0.35i39j69i57j46j0l4j69i61.1156j0j7&sourceid=chrome&ie=UTF-8

If you find a home for $500k, you put 20% down ($100k) for a mortgage of $400k. Assume your mortgage interest rate is 4% for a 30 year fixed which is a little higher than the standard rate currently (its safer to assume a higher rate) The monthly mortgage payment is about $1910 just for the mortgage. This excludes property taxes. Property taxes in NYC is about 1% of the property value for the year. so 1% of $500k is about $5k. To add it to the monthly mortgage payment ($5000/12 = $416.67) Totaling a monthly payment $2326.67. This assumes you find a 2 family house for $500k which is highly unlikedly in corona. I start at $500k because its easier to scale. If you saw a $1M house you can double the monthly payment to estimate $4653.34.

 I would say to start figure out what your budget is and what you and your husband can afford. Find a good real estate agent that knows how to work with investors and familiar with the numbers and rent roll for the property to cash flow. 

And always, dont rush. Take your time to understand the market. No deal is better than a bad deal!

Happy Investing,

Charles

Hi Amy,

Welcome to BiggerPockets! Seems like you are trying to purchase your first home as an investor and work on units? Are you looking to do some renovations yourself when you purchase your first home? Or trade manual labor for some education?

What are you interested in now or looking forward to learn? Finding an agent? Finding a home thats FHA qualified? Where are you learning about real estate? Mainly BP but books they suggested too? What makes you so excited about real estate?

Happy Investing,

Charles

Hello Joe,

I would really make sure it was just 30 days they didnt pay the rent. It sounds like they stopped paying rent for a while which turned into a big headache that made the seller want to sell. Why would you want to sell on the first non-rent payment?

I would ask for proof for the last time they paid rent. Reading everybodys responses, if you believe the price is right to deal with this headache then go for it. Cash for keys is a great idea.

Happy Investing,

Charles

Hi Richard,

Did you sign a dual agency agreement? It sounds like there was some type of dual agency going on. I could be wrong not too sure. Usually when the brokers firm represents the buyer and seller they wont have interest of both parties at its best.

The most common example is usually the seller would want to sell for as much as they can, and the buyer wants to buy for as little as possible. So if the firm represents both who wins ??

I would always try to avoid this type of situation and you can always object to this at the beginning of the deal.

As mentioned yes you can always report this behavior because it violates the fiduciary duties of a real estate agent.

Best,

Charles