All Forum Posts by: Nick G.

@Cody L. I figured it out. You have to reset the payment value to 0 so it knows that it needs to calculate it anew. Otherwise it doesn't know what you want from it. It's a mentally-challenged calculator that needs a bit of hand-holding.

@Cody L. haha, I hear you. Try that calculator I linked you too, it's fairly customizable which I like. 

Only possibly thing I can think of is that they're compounding the interest at a more aggressive frequency somehow. Normally continually compounding interest = daily, but maybe they're compounding it twice daily or some nonsense. Not sure, wish I could help you more, man. If you figure it out, I'd love to know what the heck they're doing.

@Cody L. Lol. Hmm, not sure about an XLS-friendly breakdown, but 360/365 calculators are a thing. Try this one, make sure the amortization is set to 360 days under settings. https://financial-calculators.com/amortization-schedule

@Cody L. From what I understand, the use of the 360-day interest year still has to be based on the physical 365-day year that the real world lives with. In other words, your daily interest is based on a 360-day year. Except for the fact that uh, a year is not 360 days. It's 365.

What this means is that you pay 4.5% interest for 360 days, which breaks down to $X per day for 360 days... and then the remaining 5 days of the year on top of it are added to it at the same daily rate. The way it calculates out, the effective annual interest rate is actually something annoying like 4.551%. Ish.

Pretty dumb if you ask me, but it's a thing. Something to do with the old Egyptians.

@John Payne I could be wrong, but I don't think the bank typically has the right to refuse payoff, subject to the actual verbiage in the note, of course. The trick is closing the transaction before the deadline, because if the bank forecloses, the deal disappears just like that. I agree that banks definitely like their notes to perform.

Yeah, subject-to is cool, but really make sure you do it right. You also want to be prepared for the bank to call the entire note due at a moment's notice, so just make sure you do it prepared and by the book. I've seen a pretty sharp user on BP named @Bill Gulley who has talked about it, and I know there are others to that *really* know the right way to do subject-to. Good luck!

1. Seller financing or some version thereof might be a good option here for the seller.

2. Both FHA and Fannie/Freddie have rehab loans. Otherwise, a portfolio loan would be your next option, with hard money as you last and most expensive option.

3. Personally, I will almost always like having my own renters, not someone else's. It's just safer. That said, it's very possible you may need to honor the remainder of their leases.

As a final note, you called this person a "client," which means you owe them a fiduciary duty whereby you put their needs above your own. That can be exceedingly difficult to do in a situation where you are buying a property from someone whom you owe a fiduciary duty to. So consider exercising extreme care, or explicitly do not represent them for that property. In my state of CA at least, negligence/violations of fiduciary duty are one of the biggest drivers of lawsuits that take agents out.

@Josh Sabourin Run the numbers man.

Total rent cost scenario = rent due every month

Total own cost scenario = PITI due every month, + utilities, - interest tax deduction, - principal reduction, - avg YoY appreciation/12, - forced appreciation (if you fix it up.)

For example, a completely made-up scenario where the numbers are made-up but demonstrate a very real principal:

Total rent cost scenario = ($1500) Rent = $1500 true internal monthly cost

Total own cost scenario = ($2300) PITI + ($250) utilities - $150 interest deduction - $450 principal reduction - $300 [2% YoY/12months] - $150 [Assuming $9,000 of value added from improvements divided over five years living in home]

= $1500 true internal monthly cost

Once you've calculated your total liability for each scenario, then you should weigh out the non-tangible benefits of each:

Renting - increased mobility, limited responsibility for repairs and things, lower up-front out-of-pocket cost.

Owning - Net worth of owners across the US has been shown to be much greater than renters. No landlord to tell you when to move out of your house, or if you can paint the walls, or if you can have a dogs, or if you can plant new flowers.

That's how I tend to run all of my dilemmas in life, as objectively as possible. Personally, I do fall in the ownership camp if you can swing it, but that doesn't mean I think it's 100% right 100% percent of the time. I agree that owning a home now and living in it would jump-start your REI goals - it's what I did myself last year - but you still should run the numbers. Always run the numbers!

Good luck to you.

@Patrick Senas The lender will be having you sign an affidavit that you will occupy the home for 12 months. If you did not do so, that would be loan fraud. No bueno, just go live in the place for at least 6-12 months, and have a really good reason if you need to move out earlier than 12. If you need a good SoCal lender, I know one or two that are truly excellent.

@Manuel Angeles That's a solid idea, though keep in mind FHA is 3.5% down (3% down is a different conventional loan). Multifamily is very expensive out here though, so don't be afraid to settle for a duplex or a triplex if that's all you can comfortably swing.

@Zach Shrader Run the numbers!

Total rent cost scenario = rent due every month

Total own cost scenario = PITI due every month, + utilities, - interest tax deduction, - principal reduction, - avg YoY appreciation/12, - forced appreciation (if you fix it up.)

For example, a completely made-up scenario where the numbers are made-up but demonstrate a very real principal:

Total rent cost scenario = ($1500) Rent = $1500 true internal monthly cost

Total own cost scenario = ($2300) PITI + ($250) utilities - $150 interest deduction - $450 principal reduction - $300 [2% YoY/12months] - $150 [Assuming $9,000 of value added from improvements divided over five years living in home] 

= $1500 true internal monthly cost

Once you've calculated your total liability for each scenario, then you should weigh out the non-tangible benefits of each:

Renting - increased mobility, limited responsibility for repairs and things, lower up-front out-of-pocket cost.

Owning - Net worth of owners across the US has been shown to be much greater than renters. No landlord to tell you when to move out of your house, or if you can paint the walls, or if you can have a dogs, or if you can plant new flowers. 

That's how I tend to run all of my dilemmas in life, as objectively as possible. Personally, I do fall in the ownership camp if you can swing it, but that doesn't mean I think it's 100% right 100% percent of the time. I agree that owning a home now and living in it would jump-start your REI goals - it's what I did myself last year - but you still should run the numbers. Always run the numbers!

Good luck to you.

Depends entirely on how fast you can close escrow on it, which relies heavily on having solid title/escrow companies and solid communication with the foreclosing lender. Once the foreclosing lender files an NOD, they can file a Notice of Trustee Sale after 90 days. Once an NOT is filed, they can foreclose once another 27 days goes by, so the clock is really ticking at that point. After an NOT is filed, you have to assume they'll be foreclosing on day 28. Therefore, hopefully you'll have started talks with the bank prior to one week left of that countdown. Seven days (which may really just be five business days) is pretty darn tight to start calling the lender to start arranging a payoff. It's doable, but it's probably going to feel pretty stressful.

@David F. I'm sure they will, Fannie and Freddie don't care about non-recourse vs recourse as far as I know - if any outstanding monthly obligation shows up on your credit report, they're going to factor it into your ratios. Good news is that like @Andrew Postell mentioned, they should be able to credit you 75% of your rents as income to help balance your ratios.