All Forum Posts by: J. Martin

Isn't it funny how quickly the conclusion can change?

I got an appraisal on my last deal at $265K. Then a few days before close, they sent a new "final" appraisal at $245K because they found out I had negotiated the price down before the appraiser even went out there..

Amazing how the appraised price = the purchase price when you have a "good" appraiser! If you fail once, try, try, again..

The answer is...... YES YES YES! ...most likely! (though check with an FHA lender)

From FAQ on the HUD website:

"To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable)" (italics added by me)

In your case, the refinance you plan on doing will pay off the "existing FHA mortgage", then a new FHA mortgage is acceptable.

The caveat..

"FHA will not insure a mortgage if FHA concludes that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be encumbered will be the only one owned using FHA mortgage insurance."

http://portalapps.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-879

You really have to talk to the loan agent/broker who is doing your deal to get the specifics, but HUD's FAQ states that it is acceptable. Don't know how exactly they would go about assessing if it is being used "as a vehicle for obtaining investment properties." It's a great program though!! 1 only myself! Good luck!!

Like @Lee Marsteller said, I have heard Odesk is good, and I've heard from many that the Phillipines is the place to outsource to, due to price, understandability of English (which apparently understandability is not a word, so they won't use it..) and educated, hard-working people. Although I'm sure everyone's experience isn't a success.

A fellow forum member @Adam Hofmann has a bit of experience with this, if he doesn't mind chiming in..

Hi @Pete Tam ,

To get some cash flow out of your investment, you'll either have to go inland/out of state as others have mentioned, or out to the periphery of the Bay Area up away from the South Bay. Places like Richmond, Pittsburgh/Bay Point, Antioch.. Still within commute to employment centers, but not the A/B markets like San Francisco, Berkeley, parts of Oakland, and the South Bay.

The South Bay is on fire! Tech is booming! There's spillover in high rents up here from SF & Oakland, but prices are still reasonably affordable. If you're interested in some hard numbers, message me or email through my website below. You can also talk to BP members about of state investments that have much higher cash flow, but much higher expenses per dollar of rent (low-priced areas w/ very low prices, and rents in the $300-1000 range, or more sometimes). I wanted something I could drive to and keep an eye on if I wanted, but many others are also finding success out of state. As others said, the most important thing is building a trustworthy team in that area, and to some extent, having enough properties to make it worth building that infrastructure in another state..

@Matt Mason is right on. 3.5% down FHA on up to 4 units is the government's gift to an entrepreneurial spirit! They will also count about 75% of the rents on the 3 non-owner-occupied units when underwriting your loan, so the purchase price you can qualify for can double, triple, or even quadruple, on the properties I have personally looked at.

Good luck Pete! Let me know if you have any questions, or explore the many great forums here on BP..!

Interesting John. I wasn't even aware that distressed sales weren't in the Case-Shiller (as stated, no expert on their methodology..). I seem to hear people talk about the impact of foreclosures on prices, but maybe it's not through the index, and just through the overall impact on neighborhood prices..

Thanks John!

I can tell you have a kind heart @Michaela G. !

It seems like any solution I see on BP, whether it be this, late rent, etc is file eviction immediately and throw on the street! I saw the same thing from BP members on a post you replied to regarding towing a car in SF (take it to the street and have the city tow it!).. Maybe it's just the experience of having dealt with so many poor tenants.. There's no slack.. But that's a great way to piss off the tenant and have them thrash your unit/garage/exterior whatever.

I agree with you, that often times there is a mutually beneficial agreement that can be arranged, given that you are stuck in a situation that no one wants. Maybe you can review their app/credit and make something work out, letting them know the legal alternative.. I always start by approaching someone with respect and reason several times before taking the hard road out. I was going to suggest in the tow situation that they let the tenant know they can get $300 cash and towed to the scrap yard for free typically, rather than have to pay a tow fee and impound it, which they will never get out.. maybe it would light the fire to get it moved.. and avoid a pissed off tenant that might come back to break something!..

I am firm when I need to be, but I'll learn to be more of a hardass someday like other BP members.. In the meantime, I'll try to treat all humans with respect and courtesy until they've proven undeserving of it.. :)

@Bill Gulley , I agree the index increases are heavily pushed by marketers of real estate, and I love your quote:

"Realtors and builders usually to form public opinion and generate business, if prices fall, it's time to buy, if prices are going up, it's time to buy now." lol

@John Rooster , your 'code creep' comment is very similar to what I'm talking about. Although in these few years in the crisis, this has happened in extreme amounts and in a short time period over just a few years. If 1 of every 10 homes was a flip at 100% increase over the prior purchase price, then it adds about 10% to index price gains..

Just an idea that I'm a little surprised more out of town owners haven't done.. I paid about $1,500 for the installation of a high-quality 4-security-camera system, which can be monitored by both the tenants (and you!) from a laptop or mobile phone on one of my SFR's (internet must be hooked up, but most tenants do it anyway and like to be able to monitor the outside of the house remotely, even if there's nothing going on.) The tenants were more interested in that than turning on the already-installed alarm system because there was no monthly cost. No cost for the video feed (but third party is not monitoring it). Plus, I think it's a better deterrent from the outside. I put up yellow *you are being recorded* signs right next to the camera. Then throw up some security alarm stickers. Your deterrent factor is higher, the tenants seem to like it, and you can even monitor what's going on remotely! (I actually didn't get my laptop/phone hooked up to it, because I live here. But maybe in the future.. And I've seen it on the tenant's phone. It looks good)

I stumbled across someone locally who does it, but I'm sure you could find someone there if you or other out-of-town investors like the idea of paying a bit more for that level of security and obtain a remote monitoring source of the exterior of the properties. I live in a lower-income area, so I figure that the better tenants you will get with a safe house, the ongoing safety the tenants feel, and the lowered risk of a break-in (when occupied or vacant getting ready to lease), and reduced headaches/vacancy/potential damage are worth the marginal up-front cost of having it installed. Having said that, prices and rents are higher in the Bay Area in CA than many in the lower-priced states, so it might justify the investment a bit more..

Stay safe!

@Jesse Brown ,

If it's not too late for you to join, we're meeting up in SF at Rogue Brewery at 673 Union St, SF tomorrow, Monday 11/18 @ 6:30PM.

Anyone else who wants to attend, please come say hi!

PS. I'm a fix-and-rent investor too, Jesse. Hopefully we can chat later if you aren't able to make it tomorrow night.

@Michaela G.

I think you're the first person I heard that accidentally bought some income property! lol Congrats to you on building the portfolio when you realized the opportunity. Sounds like you went through the hoops, but it's all working out now. All's well that ends well! It's a bit harder to build the cash flow that quickly in the Bay!

You're spot on with Richmond and a lot of other low-income cities around the country. I live here at my 4plex near the BART station, and it's not nearly as bad as even I had the perception of before I bought here. So it does all get lumped in. Works for me, becasue I can spend my time on the ground and differentiate between what's worth it, and what's not. Out of town buyers can't really make this differentiation as well I don't think, which gives me an advantage.

The meet-up is NOT at BART, but its about a 10min bus ride from the Montgomery BART station, up in North Beach (about 1hr10min from Richmond BART). Rogue Brewery is at 673 Union St, SF. Use google and search public transit or 511.org

Would you be interested in meeting up in the East Bay with BP members in the future? I still haven't seen a regular East Bay meetup on BP, and gathering a list of those who are interested to get that critical mass going..

Hope to see you tomorrow, and congrats on your investments!