All Forum Posts by: Christopher Foote

@Christopher Foote I can give you a referral for the fix and flip loan.

@Greggory Kowalkowski If you are not telling the bank about the rehab kickback it is fraud. It is clear. The is a sales concession and therefore a reduction in sales price. Find a fix and flip loan, you can finance 90 % of the acquisition and 90% of the rehab as long as loan is 70-75% of the after repaired value.

@Claudia Starr There are lenders that will do fixed rates on investment loans and close as an entity. They are specialty lenders and you should expect to pay more than going conventionally. I would say you would find something in the mid 7’s on a buy and hold. Depending on your profile. Despite the fact that you may be closing in an LLC the lenders will require a clear line to the borrowers as guarantors if the loan.

@Thomas Bender I’m a lender and I’ve seen people do this. The challenge is that it is typically a violation of the loan documents and can trigger acceleration or a call on the loan.

@Pat Noyes I f you want to use the equity in your primary to buy more property you can go either way. I personally don’t like attaching equity lines to a primary that you are using for investment, Intetest deductibility can come into question on the heloc under current rules, if something bad happens to the house you are still on the hook for the heloc etc. i like keeping the financing on an investment with the investment property. If you sell the primary, use the proceeds to buy an investment and a new primary fha what is your plan after that? You indicated buy new primary, live in it for a year then rent it. Do you plan on buying another primary after that? If so you are running down a slippery slope and it could backfire on you. Most lenders will identify that you are an investor and are using owner occupied rules, rates and down payment to buyand acquire investment properties. If you are leaving 1 primary and buying another you have to typically provide a very strong and compelling reason for moving into the new property owner occupied or you likely will have trouble getting the owner occupied financing. Good examples are new job 60 miles away, growing family, shrinking family, kids are grown up we are downsizing etc.,, mother needs to Move in, current property doesn’t accommodate. Just trying to give you insight as to how lenders view this so you take into consideration as part of your plan. Good luck. It’s nice to have the equity to start rolling into other properties.

@Will M. I don’t think we can compare what happenned in 2007&2008 to what could happen now if we have a correction. The mortgage market in those days created a “false” market. People were buying that had no business buying, didn’t qualify and had little to no skin in the game. As soon as non prime and Alt A crashed this whole segment of false buyers were out. Couple that with the liquidity crisis it created that made it harder for legitimate buyers to buy and it created a perfect storm. Could the market slow down? Yes. Are interest rates going up? Yes Do we have a set of unqualified buyers buying property? No Is there a liquidity crisis? No There are still significantly more buyers than there is inventory. We have wage inflation for the first time in decades, we have historically low unemployment and the economy is growing. These are not the ingredients for housing to crash. They are signs that it will continue to grow, it just may not grow as rapidly. I think sitting on the sidelines is a mistake. Make your your deals work and cash flow and you should be fine. Just my 2 cents!!

how about getting a real estate license and selling in your spare time. It would give you a heck of an education, expose you to lots of things that will help you as you build your portfolio and provide some nice income opportunities. Some of the best agents I know were investors with jobs before they decided to pursue their passion as a career.

@Alex Kouvatsos If you have structural issues (sagging floors) you will not pass an fha appraisal.

@Samuel Watts I think you will have problems on these 2. Lenders don’t like properties under construction or houses that are in the market, if you have listed them yet. Unless you have owned them for 6 months or more they will also used original acquisition cost or appraised value whichever is lower. For future reference look for fix and flips. They are designed for this. If you have a good deal that will ultimately yield a 70-75% loan to value after it is improved, you could get up to 90% financing of the acquisition plus rehab costs. If you are a seasoned flipper there are also fix and flip lines of credit. Rates on this stuff are typically interest only between 7-9% depending on credit, experience, liquidity etc.. you will also find that you can close is llc’s and do not have to close on these as an individual.

@Michael Rivera Couple of things for you here. You are going to have mortgage insurance if you are putting down less than 20%. I would not get overly concerned about the MIP factor in FHA. You may also want to look at the FHA 203K which is a rehab product. FHA will provide dollars for repaIrs and still minimize your down payment. Because it is FHA insured they may have some required repairs (usually structural or safety related). It is a good option for an owner occupied multi family and may give you the opportunity to build some instant equity. Try to find a renovation expert at one of the mortgage companies that specializes in this loan program. Expect to pay a 1/4 to 1/2 % higher than a regular fha loan. If you go this route you may find yourself with a 20% equity position in the property within a year or 2, then you could refinance out of the loan and eliminate mortgage insurance.