All Forum Posts by: Dave Van Horn

@Account Closed

Appraisals are only good for a certain period of time from a bank's perspective (general rule of thumb is about 6 to 12 months). That being said, if it's easy to keep, it wouldn't hurt especially for a buy and hold. Sometimes I've gone through old appraisals to find an appraiser in that same town for example or if I needed to refer that person to someone.

You never know if there's something on an old appraisal that you may need at a later date - it may give you more clarity on certain changes you've made to the property not just the overall value of the property.

In terms of flips, the old appraisal could help you show your business model to future investors when raising private money because it's third party validation of what you did pre-renovations. Then you could show them the new appraisal to investors and say "here's what it was appraised at before I did renovations, here it is after". Investors appreciate quality record keeping, it gives them confidence.

Hope this info helps.

Best,

Dave

@Kevin King

Good question, just thought I'd chime in.

When buying an REO from the bank, you will be getting insurable title and all liens and encumbrances will be satisfied.

@Steven Mitchell

A lot of great recommendations above.

To add to the list, I always like to recommend "Buying Real Estate without Cash or Credit" by Peter Conti and David Finkel. They not only talk about the in's and out's of acquiring property with little to no capital but they even give you the proper verbiage to use with buyers/sellers when doing the deals. 

Hi @Suzanne P.,

Feel free to PM me if you ever have any questions I can help you with. 

And if you can make it, you should also join us on our Free Note Investor Q&A Call January 18th that Mark mentioned above. On the call, along with other active note investors, you can discuss any note question (even deal specific questions) with my partner - the director of Borrower Management at PPR and myself.

Hope to see you there.

Best,

Dave

@Stephanie Knox

I would check out @Brandon Hall, if you want to do it virtually. He's online based but he's real estate specific and also a writer here on BP.

If you're interested in talking to someone in person, you could also try my colleague Chris LaSpada who operates in the southeast PA area.

Best,

Dave

Hi @Steven C. Suarez,

Although I don't truly consider myself a complete minimalist, I have definitely felt like one over the years at times in terms of lifestyle. And I've definitely felt like one while having owned well over 10 properties. I think being a minimalist is more of a state of mind. Not to mention, having a property manager helps.

But I think there is something to owning a lot of hard property and feeling some sort of burden. It's probably one of the reasons why I've leaned more into performing note investing over - no tenants, toilets, or townships to deal with. You're just dealing with the paper behind the property. Much less stressful in my opinion. And they can all be managed by a servicer, so my monthly (and yearly) accounting statements along with my checks are sent to me by mail. But hey, I still own property to this day so I think it's all about finding that balance.

Best of luck,

Dave

Hi @Dennis Weber

Over the years, we've seen countless situations like this - especially with owning so many junior liens. In our experience we've learned that the Senior Lien Holder can file a suit that the Mortgages were accidentally recorded out of order and that they will win the majority of the time. However, they will incur time, expense, embarrassment, etc. They will almost always pay you for the subordination. $1k-$10k is very reasonable to expect from the senior lien holder. NY is an expensive and time consuming state to fix this type of problem so I would expect it to be at the high end of that range for signing this subordination.

Best of luck,

Dave

Join us for our FREE Note Investor Q&A Call Wednesday, January 18th, 2017 at 8 PM EST. On this month's call PPR's very own Director of Borrower Management - Bob Paulus and I will discuss where to buy notes including PPR’s experience with the good, the bad, & the ugly states!

As always, we will allot time for a Q&A, so please feel free to bring any and all note-related questions!

For more info and to register in advance, follow the link below:
https://www.pprnoteco.com/call-jan-2017/

Call-in information will be sent via email following registration.

Hope to see you on the call!

Best,

Dave

@Yaron H.

Maximum PITI includes Principle, Interest, Taxes, and Insurance. In the US, a lender will usually take the lower number of either your front end ratio or back end ratio (and this calculation can vary depending on the bank and type of loan) as your maximum housing allowance to determine your maximum PITI. Now because you're usually looking for houses in several locations (i.e. different townships, municipalities, cities, etc) the taxes vary since there are local tax, county tax, and school tax. So I personally couldn't tell you what that payment would be until I know the exact location of the property but as a Realtor in my market I can give you an estimate as we start looking.

With the average residential property being under $200K in my market, that estimate would be about 20% of your PITI. Now the 80/20 calculation is the general rule of thumb in my area and there's certainly exceptions to the rule but it's a good place to start.

To keep it simple, let's look at how we'd calculate the cost of a $100K house in my area, assuming you're using a traditional 30 year fixed loan with 20% down. This would mean a $20K down payment. Taxes and insurance are about $375/month in my area. Without assuming credit score (or various other factors) with current interest rates of 4.345% the P&I payment would be $394/month. So adding up those payments together, your total PITI payment would be $769/month. At this point, to determine if you qualify for the loan on the property your lender would look at the lower of your front end ratio or back end ratio - if that number is more than that monthly payment of $769, you can afford the house. If not, you'd have to find a property either with cheaper taxes, cheaper insurance, lower price, and/or a seller to assist by paying points to lower the interest rate.

Going back to your original question, you're not truly going to know how much property tax and insurance costs are each month until you find the actual property. I would suggest sitting down with your Realtor or Lender to determine what you could afford, and then when you find your desirable area so you can figure out a better estimate PITI payments.