All Forum Posts by: Ed Wood

This time of year I find sellers who want highest and best and are in no hurry to sell pull their properties from the market until after the holidays. I find that many buyers wait until after the holidays and what's left are sellers who need to sell and less buyers!

Nice job!

Here's a story. Back in the late 80's they built a buddhist temple in Hacienda Heights, CA and I guess any land within 5 miles of this temple is sacred land. So people were buying up this property like crazy and my friends dad got a knock on the door from a guy who just got out of a limo he asked my friends dad if he wanted to sell his house as he opened a briefcase full of cash. My friends dad yells up stairs, "honey! We're moving!" so I guess there are ways to motivate people into selling.

My opinion if you're capped at ten have one SFR for your primary and nine 4-units.

MAX DTI is 50%

Up to 45% DTI you're required to have 6 months PITI reserves, 54-50% you're required to hav 12 months PITI reserves

You're down payment on SFR's will be 20% and 2-4 Units is 25%

Income for properties not yet reflected on your tax returns will the income factor underwriters uses is; rents x 75% - PITI = net income.

For properties on your tax return they will take the net income from your schedule E and add back in depreciation and 1-time expenses (roof, kichen, frence, etc)

you can count on this information to be 100% until January 10th, 2014 when qualified mortgage rules kick in.

Nice good luck, I forgot to mention in the report they rate the reserve as a percentage of expected coverage. If it is much below 75% you need to start looking. If it is below 50% the HOA may have problems heading their way.

Motivated meaning there is a situation where they need to sell fast, or their house is in such disrepair and has been on the market for a long time they can not get full price.

find motivated sellers and make offers to them instead?

All state requirements are different there should be a reserve study. "A reserve study is a study made of all the major capital systems in the association," explains Robert Galvin, a partner at Davis, Malm & D'Agostine PC in Boston who specializes in representing condos and co-ops. "It evaluates how much life they have left and how much they're likely to cost when they wear out. From that, you can calculate how much money the association has to set aside each year to have enough to replace those items when they do wear out."

How do you do that calculation? You take the estimated replacement cost and divide it by the number of years the item is estimated to last. That number is the amount you should reserve each year.

source: http://www.hoaleader.com/public/320.cfm

In your HOA documents (at least in CA) there is a ratio already calculated and disclosed along with the date it was calculated.

Hope this helps.

Discount in rent in my opinion comes with less cost for you for example if a tenant plans to stay for 3-5 years vs 1 year you cost are less. I don't think anyone wants a bad tenant so a good tenant pays the rent on time. In our market there are 10 renters for ever rental so we usually get over asking and a choice of well qualified tenants. If we have 3 that are well qualified then it's a matter of how long of lease they want and we'll take someone at 3 years vs 1 year. Hope this helps.

This is what you will need for a conventional investment property mortgage 100% for sure.

SFR 20% Requires Down
2-4 Units Require 25% Down
620 Minumum FICO (any open derogatory items must be taken care of)
45% DTI requires 6 months PITI reserves
45-50% DTI requires 12 months PITI reserves

FICO and LTV effect your rate so the more you put down and the higher FICO you have the better interest rate you will receive. DTI does NOT effect your rate just requires more reserves.