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All Forum Posts by: Jesse T.

Jesse T. has started 5 posts and replied 1198 times.

Is there anything listed for rent locally in the MLS? Are there any apartment buildings in the area?

Originally posted by @Account Closed:

To avoid discrimination you need to determine your required income policy before taking applications. For example, requiring that gross income be 3x the rent and then applying that to all applicants. You are not in a position to determine or analyze their DTI ratios v. their savings v. their potential proceeds from the sale of the house and how it affects their ability to make a housing payment. I wouldn't even go there.

That being said, If the rent is comparable to their previous housing payment (taking into consideration PITI), I'd be comfortable. Stable income and good payment history on housing is all I need. I don't need or want to analyze the total applicant debt picture.

Agreed with this. Assuming income is line with rent and the PITI is similar to the rent, that should be enough analysis on your side. Will it just be a single person? If it seems on the edge of their affordability, I would be confirm their will not be additional occupants - even if the income looks better combined they could be credit issues that might make the application weaker.

Post: Multiple Realtors

Jesse T.Posted
  • Herndon, VA
  • Posts 1,231
  • Votes 324

I think 3 agents would be a reasonable number assuming you will be buying one property.  I would want to see a past sale representing an investor, a tour and analysis of a property that you pick and a property that they suggest.  

You will need to pick out 3 potential properties and have the agents suggest unique properties, so that it is clear the representation if you purchase any of those properties.  I would expect an agent would have an agreement to represent you on any properties they find, if you sign an exclusive buyers agreement - I would limit it geographically and in time frame.

Post: Owner Financing

Jesse T.Posted
  • Herndon, VA
  • Posts 1,231
  • Votes 324

It sounds like they are a little bit shaky as a tenant - paying late more than once.  That might be expected given their credit history and the rental market.  This may be an acceptable risk for a rental, however the risk increases greatly if you sell via owner-finance and you have to do a foreclosure to get them out.

If they had a perfect payment history and seemed on track to be able to finance conventionally in a couple years, it would be a different story.

Post: Raising rent mid lease

Jesse T.Posted
  • Herndon, VA
  • Posts 1,231
  • Votes 324

You have to honor the lease amount for the length of the lease.   Unless you are getting a great deal on the central AC, it might be best to delay until Spring at the earliest.  If you are close to the end of leases - you could use the improvement as justification for an increase and an incentive to renew.

I can see a segments where there may be a decrease in values - high-end Multi-Family seems especially vulnerable.  Although a lot of areas are stretching affordability for buyers, overall I think that Real Estate isn't terribly overvalued.

It will be interesting to see what happens when rates increase.  Generally prices actually tend to go up when rates are high(a lot of this may be due to inflation being reflected in long-term rates).  However I think increased rates will start to squeeze affordability, so it will take decent wage growth to counteract that affect.

Post: New Member in Northern Va

Jesse T.Posted
  • Herndon, VA
  • Posts 1,231
  • Votes 324

Welcome to BP!

Originally posted by @Account Closed:

5.  To my knowledge there has never been a 10 year time period of no appreciation.

 At a national level you can look back 10 years(near the top of the bubble) and see little appreciation.

Not to say this at all typical, but it is possible.  I think you really need to have at least 8% appreciation to cover holding/transaction costs, so that may make the periods of flatness more prevalent.

I think the reason for lessen the focus on appreciation is that generally by the time they are analyzing properties - investor are somewhat focused on a market. So again speaking very generally the market will generally move in the same direction. A "normal" 10 to 15 year time frame will show decent appreciation in a lot of markets. However once you factor in transaction costs, inflation and additional repair/CapEx - it probably is close to 0 in "real" terms.

Post: Bubble Proof?

Jesse T.Posted
  • Herndon, VA
  • Posts 1,231
  • Votes 324

All Real Estate is local, but in general your safest bet will be B/B+ neighborhoods with low leverage, solid schools and stable jobs nearby.  Also run through your worst case - 20% value decline AND 6-12 months of vacancies.

One thing that can help limit risk when starting out is to diversify your job from the Real Estate Market.  There is a lot less risk if you generating excess cash from a job that is not correlated with the Real Estate market.  That way a downturn isn't hitting you twice and forcing you to sell at the bottom.