All Forum Posts by: Steven Griffith

Hi @Nate Tew,

Welcome to BP!  There are a ton of great resources available across BP - be sure to check the forums as there are undoubtedly hidden gems in there.

It's a little difficult to give insight without knowing specific numbers and, as @Will Fraser said, running a cost-benefit analysis.  That being said I' think I'm actually of the opposite opinion of Will, on the surface.  My gut is saying something different.

If you're looking at converting your Primary home to a rental, then you're (almost) never going to find a better refi rate than what is available now.  4.375% is a great rate - absolutely nothing wrong with that, however how low a rate could you get, if you asked around?  And what would that translate your payment too?  Just checking on bankrate this morning - I'm seeing rates of 2.625% with no points and no origination fees for refinances.  In general, the best refi rates are only available to Primary homes.  Once you move, you're looking at refinance rates for rental properties which are always higher.  So, again, without knowing your numbers (average rent of the area, mortgage, price of the rental, projected new mortgage, etc) I'd be more inclined to refinance the primary home.  I just refinanced my primary home to 2.5% with no points, no origination fee, here in NC.  Depending on your lend-ability, that is nearly 2% different than what you're at now, which could potentially be several hundreds of dollars a month, or less/more depending on your current mortgage.

Also, can I ask where the 6K in closing costs came from? That seems a bit high for a refinance on a primary residence - is that including an origination fee and annual property taxes? Or is that what you'd need to put down to get to the 80% LTV, plus closing costs? I've refinanced a few times and my closing costs are usually ~3K or less, depending on the situation. I'm happy to recommend some NC lenders, if interested.

One last option - it may be worth asking your current lender if they offer a No-Closing-Cost-Refinance option.  With that, you may not get 2.5%, but it's possible you could get around ~3% with waived closing costs.  Not every lender offers this, but it might be a way to have your cake and eat it too.

Just doing back-of-the-napkin math - if your loan is a 30yr, 200K at 4.375%, then your P&I is around 999.  If you refinanced, and folded that 8K in, your new loan would be 30yr 208K at 2.625% (current 0 pt rate listed on bankrate) would be P&I of 835, plus whatever closing costs would be (3-6K?). So assume a savings of 164/mo. If you are going to wait 2 years anyway before buying your next house, then you have the potential to save an extra $3960 (165x24) to buy your next home, and/or to offset closing costs.  This is where Will's comment about it "proving to be a wash" comes in.  If your primary mortgage is bigger though, then you save more.  If it's smaller, you save less.  If you're going to wait 2 years REGARDLESS before buying a new home, and closing costs are at or under that $3950 in the above scenario, then I'd probably refinance. You's save money for the next 28 years. If you're looking to buy a new home now, and you have the opportunity to lock in these interest rates (2.325% on a 30yr fixed for a new home purchase, again on bankrate) then you can get more bang for your buck.  So, if looking to buy now vs refi NOW, then I think I might lean towards buy rather than refi. If you're looking at buying in the future, then I'd refi now.  But that's just me.  Does that make sense?  

I'm happy to chat more - please feel free to PM me and we can set up a time to discuss, if you'd like!  Otherwise, good luck!

@Chris Martin

I didn't mean to make you defensive - just curious as to why. Just hoping to have a discussion - sorry if it came off like I was attacking you.

Thanks for sharing the graph - I hadn't seen that. I absolutely agree that past performance isn't an indicator of future success, and I also don't own property in Winston-Salem, nor Asheville. Thanks again for sharing!

@Chris Martin

I agree mostly with you, Chris, although I think I would substitute Winston-Salem for Asheville.

Asheville is undoubtedly a beautiful location and an all around great city, but I don't know if I would predict it to be one of the top 4 cities in NC. I'm curious as to your rationale?

@S Shah

I missed the first part of your answer - but in re-reading it, I see that you mention it is a non-refundable deposit. That's going to make things a lot more difficult, without his cooperation, to get your money back. Maybe leave a msg first or email that you'll go to his Broker if he doesn't respond. I won't hammer home this point anymore than this, as others have already said this, but in working with Wholesalers in the future, I'd encourage you to read and sign everything first, then send the money. Safer that way. Good luck!.

@S Shah

Google his name. Or, Google his name and 'real estate agent' to find which real estate company he is with (i.e keller williams, remax, joe's real estate company, etc). Then, call their main number and ask who the broker is and to speak with the broker. It's easier if the real estate firm is named after someone, as that person is usually the broker.

Hopefully you stopped the Wire in time.

@S Shah

I agree with what some of the others have said. Are you sure this wasn't a non-refundable fee for his Wholesaling company? The tip off here seems to be that he started sending you emails with, presumably, off MLS listings. If he is a Real Estate Agent, call his Broker and explain the situation.

The other thought I had was: in NC we have a due diligence fee. This is nonrefundable. That's not paid until after the contract is signed, though, so maybe that doesn't make sense in this case.

If I was in your shoes, I would start with his Broker, especially if he is now ignoring or screening your calls. Then I'd go to an attorney. Good luck - I'm sorry you're going through this.

@Jake Cowley

I allow it, but require that the tenants repaint any painted walls back to their original color before move out, unless they have written permission from me to not have to repaint. I tell them this in the lease and again in person, verbally. Otherwise I take the cost of repainting that wall(s) out of their security deposit upon move out.

Hi @Elise Hazzard,

No worries!  Happy to answer your questions.

I did not use the Rent Estimator prior to this.  When looking up pricing, I looked through all of the ~15-20 townhouses on the same street on Zillow and looked to see what they were renting for, then looked in the surrounding areas.  On my street, the townhouses of my same size/floor plan had rented for between 1600-2050 in the last year, with 1600 being the median. Stand alone 3BR houses rented around 2100, based on the currently available inventory.  I knew I was at the end of July/August, about to get out of peak rental season, so I listed at 1900 with plans to drop the price in a week if I had 0 interest.  I just checked the Rent Estimator now, and it suggests that the median rental should be $2250 for the 3BR/2.5BA at my address.  I'm not sure I agree with that, as all the comps it's pulling are stand alone houses with more square footage and NOT attached townhomes with a basement apartment.  

If it was a standalone house, then yes I would probably agree.  I'm not sure the Rent Estimator is able to differentiate rental differences yet between apartments, townhomes, duplexes, and stand alone homes.  Those all impact the rent pretty significantly...that being said, I'd love to rent the place next year for the recommended $2250.  Maybe I'll give it a shot!

Do you use it?  Have you found it to be accurate for your properties?

@Dylon May So, just to be clear, the PM is also the owner? Ok, then this is much more like an FSBO deal and makes a little more sense why they don't want an Agent involved. If you get an agent, then the buyer will likely either have to give up 3% of the current sales price, or more likely raise the price by 3% to cover the Buyer's Agent commission. Your choice on whether or not you think it's worth it, but again for your first deal I'd encourage you to get an Agent and then ask them a thousand and one questions about the process. Or consider giving them a lower flat rate out of your pocket to represent you if you're really uncertain, since you found the deal.

I will send you a PM with some lenders.  Shop around and find a good rate.  I just recently refinanced my primary home to 2.5% 30yr fixed, conventional because I shopped around, whereas otherwise I would have just settled on the first quote at 2.75%.  1/4 point may not seem like a lot, but it can add up.  Go to bankrate and put your numbers in there to give you a few other options.  Although bankrate can omit seller fees, it'll give you a few more lender contacts.

Well, it's the seller's prerogative on whether or not to sell the home.  You can't make them sell it, and at any point they can decide "Nah, I'm keeping it".  The same way that I couldn't "make" you sell me your car.  As mentioned above, if you bring in an agent they may up the sales price to cover the cost of the commission, but it should only be by about 2-3%.  

Again, it's all going to come down to your confidence level in your background and research. Yes, you can buy this deal by yourself using the forms from here on BP. Or you can even tell the seller your newer to REI and ask them to provide the sales contract to their preference. Of course, before you sign it get an attorney to go over it with you to make sure there are no surprises. I just closed on a FSBO, where I bought directly from the owner with no agent. But, I've had several homes before and seen the process run through by professionals, so I had a good idea of what to do, what to get signed, etc. I feel like I've come out on top as I've now renovated the place and rented out both the lower and upper, but I'll probably feel that way until I (or someone else) realizes I forgot something crucial.

I hope that's helpful!  Look for my PM with some lender recommendations.

Hi @Elise Hazzard

Thanks for the follow up!  Yes, I approved them and they moved in yesterday.  I did send them an Amendment to the contract outlining the "provide proof of employment by Aug 21 or 6 mo rent is due", which they signed.  They provided the Sec deposit and 1st month's rent upfront, and I called their listing agent to confirm the house as under contract.  Their credit scores were 680s, so in the "Good" range.  I am a little nervous about the process as this is the most uncertainty I've had regarding a tenant previously.  Here's hoping this isn't a painful learning experience, but again - at the least the mortgage is covered by the basement tenant.  I'll let you know what happens in a few weeks, on or before Aug 21.

Yes, fortunately we were not damaged by the storm!