All Forum Posts by: Jason Wray

Samuel,

There are still a few good properties in Kissimmee in terms of town homes with reasonable HOA fee's. The big takeaway is you want to locate the units with the lowest HOA fee to avoid it sucking the life out of your cash flow. You also want to make sure they are not STR restricted and offer the option to VRBO.

There are some good deals in the Townhomes over in Saint Andrews Court where HOA's run around $200 a month. Prive points are between $200-$295K depending on GLA/sqft and location on the property. Once you get above $350 a month on the HOA fee it might be a better idea to buy a SFR - single family home.

Travis,

When it sounds too good to be true it usually is BS! Mortgage rates are nowhere near 4% due to FED rates, treasuries, and MBS currently so unless this is an "Angel Investor" it's not possible to be that low. There is also "No minimum credit check? -Credit is a prime risk, and close in 4 days? It cannot be a true RESPA lender if they are closing in 4 days so maybe hard money or Non/QM.

You usually see asset lending have extremely low rates but that is for borrowers who have a substantial amount of money in an account. That type of lending is still not worth it to have your assets tied up and still pay interest, essentially using your own money.

You have to watch out for teaser rates or companies who still do not understand "Bait & Switch" advertising who could be a sitting duck for the CFPB to come in and fine them for trigger terms and non-compliant advertising.  Loan officers and companies are hurting for business so they are trying hard to push all marketing to get attetion.

Dave,

As a Banker my advice would be refinance the home in Florida and take out some cash.  You mentioned that the credit is not perfect so the  first step would be to increase the scores.  There are several ways to increase credit scores even with debts or collections.  Bankers and Loan officers have tools and experience on helping borrowers improve credit at no cost.  

If you can get your scores up to 680+ you can get a decent rate to pull cash out and use that to buy more rental properties.  You do have a low rate on both homes but do not let the rates control your future income.  A rate can be refinanced in the future and lower rates will come back in the next 12-24 months.

I would also set the Florida home up as an STR, I am in Pinellas County and Hollywood is a great place to both STR & LTR. My next question would be do you own a primary residence and if so do you have equity in the primary. You can pull cash out of a primary at a lower interest rate and with a lower credit score versus a NOO investment rental.

You are in a "Great" position the only thing holding you back that I see is possible credit scores.  You may be surprised and it may not be as bad as you think so it may be worth it to review all 3 bureaus.  Once you have a full report you can run a few simulators like "rapid rescore", "Wayfinder" or "Credit Wizard" these are all tools most banks and lenders use to help a borrower see what can be paid down or off to get a specific score.

You also have options to inquire about "Pay for delete" collections and check you statute of limitations on collections based on the state.  There are also demand letters that can be written for proof of debts which if written properly give the debtor and bureau a certain number od days to respond/proof or they get deleted.  

Jordan,

You might want to consider doing a cash out refinance because a HELOC carries a lot of investor burdens. You are also going to have an almost impossible time taking out a HELOC on a rental property. HELOC rates are as high if not higher than 30 year fixed rates right now so it may be a better idea. Most people hesitate due to a low first mortgage rate but that is not a good enough reason to not use equity in your home.

Especially if you are buying more rentals creating more passive income and lastly refinance for a lower rate in a couple of years. When you calculate the blended rate between the low first rate and HELOC versus the 30 year refinance in most cases the refinance makes more sense.

If you live in this home but rent the basement there should not be an issue with the lender or bank.  Unless you have a confused loan officer or lender with excessive overlays.  

Joe,

There is not much to be worried about if your buying in the right market and you do not need 20% down. You can always stay liquid and save your reserve cash and use FHA and put 3.5-5% down on a primary 2-4 unit. You can refinance in a year and lower the rate and transition it into a conventional loan if the property continues to appreciate. At that point you can move out and rent out the unit you were occupying.

This is the stage where you would have to see how much equity is in the home to pull some out and start the next primary purchase. You would have saved 10-15% by going FHA the first round so you would have some cash left over. If you used that cash to renovate again it may have helped speed up the value to take the cash out to buy once a new home.

FHA doe carry MIP but you can eliminate that on the refinance in 12 months if you target the right home. At that point you could refinance for a lower rate when rates come down next year as well.

Ravinder,

You can use a protfolio program and take out 75% LTV cash out. Non-warrantable is generally an easy situation since its relatd to the basic overlays that mot lenders carry. Occupancy rating, Owner versus renter ratio, reserve balance, "Airball" meaning condo/HOA does not own the land it sits on or 100 year lease the list goes on even litigation is still acceptable.

Pastor Josh,

You are on the right track and the good news is that being a pastor offers a tax break on your real estate and income. It makes it easier to approve when the banks are underwriting the home purchase. It also allows for a bigger purchase price by having a lower DTI without the hit to earned income.

Just do not wait too long because interest rates are at an all-time high might not make sense but if you buy now. You are getting the home before it increases in value/sale price and can refinance the rate in a year or two when rates drop. There are way too many people on the fence right now because of rates and others thinking value will drop. Values will stay strong in the majority of the states.

You may see a dip in luxury or higher priced homes due to end of year or rates but most homes in general are still appreciating. Mortgage rates will drop so you can always refinance down the road and lower your payment. You cannot lower the purchase price if homes continue to go up in the future so regardless of lower rates you will pay more due to higher values.

If you are buying an investment home you only need 15% down unless you consider vacating your current home to transition it into a rental. If that is a possibility you can then buy another primary and only need to put 5% down.

Jonah,

Depends on the loan amount, location, and overall HOA fee per month. The biggest take away is the HOA fee if it's over a few hundred dollars that crushes your cash flow/ROI. You have to also look to see if they restrict STR short term renting like VRBO/AIRBNB. STR can help overcome an HOA fee.

You also have to make sure its not a Non-warrantable condo or have any legal or reserve issues.  

File an unlawful detainer action 

Hansel,

A few things to consider when buying a townhome versus a SFH is overall cashflow/ROI. On one hand it is nice to have the hands off approach when it comes to landscaping, exterior maintenance, pool cleaning and savings on products like chlorine, gas and time for lawns, etc. But it does come as a price and that is where the HOA fee becomes a menace.

Take the HOA fee for example without knowing your HOA fee I will use a generic amount. Let's say your HOA fee is between $350-500 a month. Thats a big chunk of change that cuts into your cash flow. Now use that same amount of $500.00 that monthly payment is the same monthly payment for a $80,000.00 mortgage at 6.5% The reason I show this is because by going with a Townhome or HOA fee you are cutting yourself short on the mortgage amount/home loan.

So if you purchased a townhome for $200K because of the HOA fee you could have afforded a $280K single family home because there is no HOA fee. You would have to factor in the home owners insurance and taxes to be completely accurate but its still a bigger home loan. That is jus one area to look at in terms of best bang for your buck.

You always want to do a little research on the townhome/cond's HOA in general to make sure they are no in distress or under litigation. Making sure they have a sufficient reserve account and no restrictions that will effect your long term goals.

On the opposite side you might have a townhome that offers a closer location to an attraction, or located by an amenity like the beach or other. Then it might make sense if it can be used or zoned as a STR AIRBNB/VRBO.