All Forum Posts by: Gordon Cuffe

@Kathryn MoreaDont tell too many people about this city. Look into the Lakeland FL area. Half way between Tampa and orlando. Lower prices than those two cities. Population growth along with job growth 30 minutes away. A few baseball teams have spring training games in the area.

@Jason Holloway There are many fewer seller financing oportunities compared to traditonal sales. That is because most sellers want the funds to buy another property. If you find that one seller who just wants a fixed income from seller financing then go for it. Just use a title company like you would for any traditonal sale. Owner occupied owner mortgage rates are in the low 3% range so at least you have that to look forward to.You just need to get pre approved by a lender or broker then start looking for properties. 

@Jeremy ClarkeThe capital gains tax amount is based on how much your property has appreciated since the time of purchase not on how much you owe.  If you purchased a house for 200k and now it is worth 400k then your gain is 200k and that is how much you get taxed on. It doesnt matter if you owe 50k on the house or 380k. You get taxed on the gain. If you dont want to pay on capital gains when selling an investment property then do a 1031 exchange. 

@Ben SchembriYou are incorrect in your dti calculations in regards to underwriting a conventional non owner occupied loan. I've been a mortgage broker in Rocklin CA since before Biggerpockets was created.

A person would need to do 12 brrr types  of transactions(loans per year) in order to see a drop in their credit score. That is impossible to do 12 brrr transations in one year so dont worry about your credit scores. The biggest challenge with getting a non owner conventional loan is that lenders give you 75% of the actual monthly rental income when calculating dti. The lenders give 75% of the rental income because they figure there will be a vacancy at some point. The underwriter will use what is on the lease to determine the monthly rental amount and the appraiser will do a rental market survey when he appraises the property. If the market rent is lower than the lease provided then the underwriter will use that amount as the monthly rental amount.  A rental market survey is completed to keep the investor honest. 

@Ross GleasonI was referring to conventional loans. Your calculations are incorrect when referring to underwriting a non owner loan. If lenders used your formula ,we would never get non owner financing. Here is a example. If a person has a gross income of 6k per month and his primary residence payment is 1800 per month. That is 30% housing dti. lets say he has a car payment and credit card payment at $400.0 per month then his total dti is 36%. That person wants to buy a rental house at 150k with a total piti payment of $900.0 per month and the house rents for $1200.0 per month. The lender will use 75% of the rental income as income towards the payment. 75% of 1200 is 900. The 900 per month offsets the additional 900 per month liability so he easily qualifies. If that person was purchasing a house with a 1200 per month payment that rents for 1200 per month then he would get hit with 300 per month in debts on top of the 2200 per month. His debt to income ratio would be 41%. A lender would probably approve that loan, but if he wanted to purchase a house with those same numbers again, they would probably decline it because his dti would go up to 46%. I've been working for a mortgage broker for a long time and that is how it always how it has been. I just cant believe that a person can get a FHA 30 yr fixed rate at 2.75% right now because of the drop in interest rates.

@Ben Schembriyour dti should not go up by a lot as long as your mortgage payments on your rentals are lower than your rents. If a house is rented at 1000 per month and your mortgage payment is 750 per month, you dti does not increase at all. You can do this until you have maxed out on the number of mortgages you can get in your name. Now there are lenders that do not look at a investors overall dti and just look at the rents compared to the mortgage payment of the subject property.  

@Kamal Sharmayou will not find anything built 1990 or newer where you can put 50k down or less anywhere within a 3 hour drive to you in CA. Look at home values in the kansas city area and rents and you can find something built 1990 or newer for 200k or less. If you are willing to go with a older home that has been remodeled then you can try Fresno or the Marysville, Yuba City areas. 

@Shang Shangsometimes the problem with having the realtor be the property manager is that the realtor is so busy doing the real estate that pays a lot more money, they do not have time for the property manager duties. Property management doesnt pay much unless you have a ton of properties that you are managing. If you have many properties to manage ,then the person needs to hire people to help.  good luck in your search for a property. 

@Jonathan A. Marshall Sr.I was at the foreclosure auction this past week. The problem with the foreclosure auction is that most of the properties were postponed at the last minute. Borrowers can request for loan modifications to postpone the sale many times. The other problem is that the investor has to bring cashiers checks to the auctions. If the investor is bringing the cash, they do not need someone to partner with. If you were to put a property under contract before the sale then the investor would want to send cash to the title company to invest in your deal. If you keep following those properties that you mentioned, you will probably see that the sale gets postponed. Foreclosures are at a all time low right now. 

@Sean DuPreI can help you on comps. You should ask the owners how much they want for the house to make sure they have a realistic price considering the condition of the house. Dont have anybody look at the house until you get it under contract otherwise your just wasting everybody's time. Dont get hung up on selling in the name of the trust. It is easy , just more paperwork. You can pm any questions. I know the Sacramento market.