All Forum Posts by: Ken Teng

I would define local as within 2 hr drive. Beyond that, it's not any different than out of state. If you cannot find good deals near Santa Barbara, which is likely, then you may go to anywhere in the country.

@Chris Mason 0.125-0.25? I am hearing a 0.5% increase in the bay area.

After the Trump victory, the bond market is really bad. This triggers a higher mortgage rate. The current 30 yr fixed is close to 4%. Does that mean the housing market will cool off more? What are your thoughts?

You need to factor in tax, vacancy, maintenance, repairs, capex (once in a while you'll need a big ticket item like roof or furnace) and property mgmt if you do not manage yourself. 300 for a 70k property is way too low for cashflow. You should aim at 1% (rent is 1% house price). This may be difficult now, but still possible. At BP, some people insist on the 50% rule (half of your rent goes to cost). This is probably not a bad starting point.

Your career highlights. This is critical!

Cash-out refi is very difficult after 2008. Try Home Equity Loan, like HELOC or HEL. HELOC works like a large credit card with a variable rate and usually baloon payment schedule. HEL is a lump sum cash-out usually with a fixed rate. However, as these are secondary loans, their rates are generally higher than conventional mortgage, but still lower than hard money.

Because Vancouver passed strict laws to crack down on speculation, now the all the money goes to Seattle, and drives the market up very rapidly. So if you find Vancouver expensive, Seattle is not a lot better.

Getting a conventional loan is very easy. Just talk to several banks to refi your FHA loan, thus your FHA loan is dropped. You usually need to put 20-30% down. But based on your description, your value appreciation and sweat equity, this does not seem like a problem.

If you do a new conventional loan, you can lock a rate for 15 yr or 30 yr, which is your option.

The above-mentioned HELOC is actually pretty tricky. You have a variable rate. It floats with bank interest rate. Instead, you can use a home equity loan (HEL), which is a lump sum with a lock in rate. Both HELOC and HEL are a secondary loan, and can have higher rates than conventional. If you know when and how you will need to equity money, go for a conventional mortgage.

I remember there is a BP Podcast about this. It does not matter what lenders say. It only matters what is in your contract. The lenders may verbally allow you to transfer your loan to an LLC, but later when the interest rate gets higher, they call your loan based on the contract, because your loan is now under-performing for them. So anyways you need to have a new, or at least revised, loan contract to avoid future hassles.

@Sean OToole I agree that manufacturing jobs may not be reinstalled back to the previous heyday level. But as far as I can tell, the rusty belt is an area with less bubble than other areas. Also this is an area with the resolve to change the status quo, as is evidenced by this election. So we may see some changes, hopefully positive ones, in the near future.

The reason I brought up Trump is that it may be a good idea to wait a little while before pulling the trigger. Currently the entire nation is in a volatile state. It may pay to gain a little more clairvoyance. But as always, the more certain it gets, the less gain we can get. So everyone should decide how long to wait for themselves.

We are getting a little off topic here, maybe we can move somewhere else for this discussion.