All Forum Posts by: Nick G.

@Harrison Chiu Yeah, things can be tough with a dual agent. At the end of the day, you're in charge, so do whatever you want. Always do your own research, like you have, and trust in it. Go back and offer them less, who cares? What's the worst they can do, say no?

Hey @Clay Sellers. If you're okay with someone else doing the work, an FHA 203(k) loan may be the ticket for you. They basically wrap repair costs into the loan itself, while still allowing you to get in with the classic FHA 3.5% down (and the rest of the FHA benefits.) These types of FHA loans often take multiple months to close, but they can be very well worth it.

Since you're not paying for the repairs our of pocket, it will also be easier to recoup your money via BRRRR.

However, if the property is simply just outdated (but still livable) and it's not falling apart, your original plan of working on it yourself during your first year of living there could work fine too - you'll just be paying the repairs out of pocket.

Might be something to look into. Either way, congrats on preparing to make your first move!

@Derek Luttrell Couldn't agree more. Good work!

Hey @Derek Luttrell. The answer to your question

"Is this worth it,or is this a sales tactic by the lender that's really just a bigger benefit for them?" 

... is totally up to you whether or not it's worth it. If cash out of pocket is important to you, I'd go for it. If a lower monthly is your main concern, I wouldn't.

If you were to add $1290 to the price of the house, your mortgage payment would probably only go up about $7-$10/month, so the lender credit via an interest rate bump is just a slightly more expensive way of getting the same credit. Technically, you could save that $10ish/month by simply giving the seller $1290 more for the property and then asking for a $1290 closing cost credit in return. Depends on how much trouble you want to go to for that extra few bucks.

With all of that said, for $20/month, it will take you the lender over 10 years to recoup their $1290 credit to you. Meaning you get to pay that $1290 over 10 years instead of paying it all up front on day 1.

This kind of thing totally normal, the offer from the lender is pretty standard and I wouldn't have a problem with going for it if I were in your shoes.

More importantly, huge congrats on the first purchase man!!

@Vincent J. Not sure who this "buddy" is, and I don't know what your "case" is, but I don't think he knows what he's talking about. Anyone worth their salt knows that there is incredible success to be had in any segment of real estate, and shooting one down as a waste of time is just silly. That being said, certain types of real estate investing can make more sense for certain people depending upon what your investing goals are. Jumping straight into commercial usually involves having an experienced partner who really knows what they're doing, and/or you're swimming in money and don't care about the risk.

I think you should go for whatever it is you can do the soonest - typically speaking, the earlier you get into real estate, the better you do in the long haul. If buying commercial means you have to save for an extra 5-10 years whereas you could do residential right now, I think you should go for residential right now. Buy a 2-4 or a residential mixed-use unit for bonus points since it's a hybrid of both.

Just my two cents!

@Rosy Bruno No problem. Yes, the PMI is more expensive, but it's no longer absurdly more expensive than your average conventional PMI, the difference isn't all that much. Good plan with the house-hacking, though I agree the 203k isn't an option if you were planning to work on it yourself.

Yes, if you used the VA loan, the idea is that you'd be able to take the down payment and use it for repairs.

If you have a VA loan available to you, it's my opinion that you should hands-down, no-questions-asked (kidding about that part) be using it. It's the Christmas-miracle-God-send-hallelujah-unicorn of GSE-backed loans. Zero dollars down with no PMI? Are you kidding me, who came up with that?? It's such a rad loan, and one that veterans are utterly and completely deserving of at that. Your country thanks you and so will your cash flow.

Keep your equity so you can maintain a lower principle residence payment, maybe use a HELOC to fund repairs if you need, or I guess a cash-out refi in the worst case scenario. Just my opinions.

Hi @Rosy Bruno. All of those loans have caps, and those caps tend to all be the same or similar for those three loans, though what the caps are depends on your area as well as how many units the property has. A quick google search for what the 2017 numbers are will tell you.

If you served in the military and have VA-entitlement, I think it's the best loan of the three. Takes a little longer to close and can be harder to get a seller to accept it when you have competition, but to you the borrower, not having PMI with 0% down is a simply massive boon for you and your cashflow.

FHA and FHA 203(k) are both great too. FHA 203(k) is a pretty different animal simply because of how the disbursements for repairs and everything work. Depends on how much work the property needs, really. PMI is pricier on these loans, but the tradeoff is only 3.5% down and a low interest rate.

All of three of those loans require you to live in one of the units for at least 12 months. Doing otherwise would generally constitute loan fraud, though there are exceptions if you need to move out a bit early for a valid reason.

All three of these loans are pretty similarly easy to qualify for in terms of income and credit requirements.

Hope some of that helps. :)

@Jonathan Jaime Velarde Hey buddy. As you know, I have my license here, so here's my opinion specifically for our state and our area.

Getting your licence is easy and cheap across the board, it's everything else that's expensive - MLS access, membership dues, electronic key fees, E&O insurance, etc. will generally cost you a few thousand each year.

As far as brokers go, this is a tough one. In my opinion, the best broker is a super smart one to mentor you and keep you and your clients, should you have any, educated and out of trouble - not a broker who can only attract agents with a "better" commission split, or a super hyped-up/exciting office atmosphere.

So, since that's my opinion, I find that some of the smartest agents/brokers often gravitate towards leadership roles in their local association, and they understand both the small and big picture of the local market. That has been my experience.

So if I were in your shoes, I'd be calling the local association staff and asking them for the contact info of some of the smartest people on the association board of directors they know, including the contact info for the current association present/president-elect. They may be hesitant to say at first, but in my experience, there's always a few who are particularly smart, and generally, everybody knows who they are.

Understand that the industry is chock-full of ego and finder fees, so often times agents/brokers will be biased towards recommending their own office because they'll get a bonus if you go with their company. Every single office/broker around has a reputation - you should try to find out what it is.

Final tangentially-related note, understand that having a real estate license means you are now looked at as a real estate professional. That means that your broker, the BRE, and most likely CAR and NAR, are holding you accountable for your conduct. This will have an impact on you as an investor, since you must do everything precisely by the book, dot your i's, and cross your t's - if you screw up, you risk far more severe penalties than an unlicensed person who makes the same goof. In California, because this state is so unbelievably sue-happy, I am in the camp of investors not having a real estate license unless you actually plan on having a business as an agent. It's just not worth the liability.

@Account Closed Yes and no.

FHA 203k is specifically for residential as far as I know. However, FHA does lend on commercial properties, (FHA 203b or 223f or something like that) but they have to be something like 75% purposed for residential use. These loans won't be 3.5% down though, they'll probably be 15% down, give or take 5%.

Sorry I don't know more, hopefully a commercial lender chimes in here. Good luck!

@Rik Wallace If you can qualify for a loan, the easiest way is to simply have her deed you the property and pay off her loan with your new loan - and since the LTV is decent, you may not need to bring in a down payment. Probably could be accomplished through a basic refi.

If you can't qualify for a loan, there are other options, all more complex, and often focusing on some type of seller (wraparound) financing. These scenarios typically look something like this: she effectively gives you the property or adds you to title, her loan remains in place, and one of you brings the loan current and resumes making the payments on it. 

There are risks involved. If I were in your shoes, I would start browsing the forums.  A lot. Learn about wraparound financing, seller financing, subject-to financing, family ownership transfers, etc.

Good luck.