All Forum Posts by: Jason Wray

Nanikan,

You should absolutely look outside of California right now in order to get into some great cash flowing properties. California has some unrealistic home values right now on top of extremely high taxes and HOA if your in certain areas or property types. Multiple states offer much lower prices with cash flow opportunities. Take Indiana for example you can still buy a Multifamily 2-4 units from $90K up to $350K all depending on turn key or need renovations.

You also have states like Tennessee, Alabama, Florida, Ohio and others that offer great LTR and STR opportunities. If you know the right people you can buy in these states and set up a trustworthy management or mobile manager to help with the up keep and maintenance. Feel free to message me if you want to Network.

If I were you I would spend more time on Bigger Pockets because you have such a large audience here who can be very helpful.  Start reaching out to BP members to ask questions and never be shy to ask for help.  Figure out who does what and try to get advice from members who have experience or work in each catagory.   The forums are great because you can post in the forums based on the questions in general.

Have a Lender question go to Lender or creative financing tab and ask away! Have a Realtor question about BRRR or house hack go to the real estate strategy and ask away.

Sending a private message is another great way if you want a certain answer and do not want to post in the open forum.  Great way to have a one on one discussion back and forth in detail.

If you have any bank/lender questions let me know if I can help answer anything.

Yes, you can reach out anytime.

Alex,

Good stuff. I wanted to add one quick tip to help buyers be more competitive and to increase the chance to get an offer accepted in this market. Ask your Bank/Lender if they offer an ELA - "Express Loan Approval". This is where the buyer can pay a small fee to have the file fully underwritten up front to offer the seller or sellers agent a "Loan Commitment" up front versus a standard Pre-Approval letter.

This also allows the buyer/buyers agent to put in the offer with the loan commitment and a (15) day closing. It's also possible to close quicker if you order a 'Rush" appraisal.

This is a busy time of the year with normal files taking 30 days to close. Most banks and lenders offer this as a way to help put in a more aggressive offer to get an offer accepted.

Shandy,

The best investment rental program is under a Portfolio program with a bank. That offers the lowest down payment for any 2-4 Unit rental at 85% LTV that's 15% down. All other brokers, lenders and CU's are going to hit you with 20-25% down plus points. There are some decent programs for single family but you will get hit on rate and points with all brokers. Brokers do not service the loan so they have to recoup their compensation plan or branch bucket margin.

A portfolio program is the banks true private funding program that can help offer lower down payments and less in fee's. It will be on an ARM product but your more than likely going to refinance within the first (3) years regardless. Usually for cash out to buy again or to lower the rate when rates move back down in the next 3 years.

Always compare notes on are you paying any points, what is the prepay if any, What is the APR not just rate, are you buying the rate down if so cost versus burn rate, find out if your LE loan estimate is a "Locked LE" meaning locked offer and for how long is the rate locked for, I would require a 30 day lock. Can you close in or transfer to an LLC if needed.

Damon,

I would not reach out to a broker I would consider reaching out to a Fully Delagated FDIC Bank. That way you avoid "overlays" and singular guide lines restrictions. You have a couple of options one being just simply do a "rate & term" refinance converting your VA loan into a conventional loan. The other option is running your CE/DD-214 to see what you have to move up in loan size also considering DTI.

You can also have (2) VA loans at the same time but there needs to be a reason that fits the "Change in Life" circumstance rule. There are several reasons that fit into uder that rule so you need an experienced banker/loan officer. I would suggest having a few conversations before you let a bunch of brokers pull credit.

Michael,

In most cases the answer is No, they will not have an issue. There are some lenders who have strict overlays and that may hurt them if they go through a smaller lender or credit union. But when you are a Veteran you can have (2) VA loans at the same time. Usually the Veteran is using the "Change of Life" circumstance which means they are moving out of state, closer to work, school, or moving into a bigger home for increased family, out of a multifamily into a SFR, it also applies to retirees or disabilty if moving out of a larger home and into a smaller one due to up keep or mibility.

Most VA loans have an assumption clause as well.

You have to factor in your overall expenses and do a cost analysis to answer your question. You would have to factor in your down payment and closing costs. That would allow you to calculate the cash flow versus the PITI. At what point will you recoupe your DP and closing costs in order to start showing a cash flow profit.

200K at 20% down is $160K loan at 6.875% puts your P&I payment at $1051.09 (Not including taxes & Insurance) are there any HOA, Flood etc.

$40K down plus standard $6-8K in closing costs ($50K).  Ballpark taxes $2400 and HOI Insurance $1100 thats $3500 /12 =$291.67.   

$1051.09+escrow of $291.67 PITI monthly of $1342.76 so ($950x2 units)$1900 - $1342.76 = $555.24 profit a month x12=$6,626.88 a year. It would take 7.5 years to recoupe your $50K before profits start.

The scary part is if you owe more than the other homes in the area it might be awhile or several years before you can refinance to get your intial capital back out.  The main goal is to be able to refinance in a short period of time to take out your initial capital and move to the next purchase.

Unless this could be used as an AIRBNB/VRBO where your STR exceeds the long term.

Congrat's Jessica!

Lionel,

You have a lot of moving parts in that post but to start with the fist issue. If you are looking to go 203K FHA you are going to have a hard time getting your offer accepted in this market. Its possible but very hard when you have cash buyers and other hard money offers. Second you can also go 3% down on a SFR going Fannie Mae for first time home buyer. That same program offers renovation options but its a pain in the rear end. meaning tedious underwriting and having to have multiple quotes form 2-3 GC's builders.

You can always apply for DPA Down Payment assitance like CHENOA to help with the down payment and closing costs.  Dont forget its not just down payment there are also closing costs which in most cases in CA can come to 3.5-4.5% of the loan amount.  When you mention "Gift of Equity" that refers to a family member gifting you equity through a family owned property treating a purchase like a refinance.  I think you might have meant "Gift Funds" where your family member gifts you some cash to help with DP.  Unless you are buying a family members home than you are correct 'Gift of Equity".

Make sure you ask the bank/lender how many 203K or DPA loans a they do a month.  You need a loan officer or banker who is well versed in these programs to not waste your time or worse make mistakes.  Which can hurt your earnest money and your chances of closing on time or at all.

Then compare quotes Rate, APR and are you "paying points" all very important.