All Forum Posts by: Nicholas Morris

Couple things:
1. What is the added cost to double close?
2. Is there a way to double close if you do no thave the full downpayment to close the first closing?

Here is a quick explanation. I put in an offer on a short sale and im looking into the future if it gets accepted. Purchase price 160,000. Its worth at an absolute minimum 210k but more likely 240-270. Its a duplex that is rented out at 2100/mo. Its 4100 sq ft total. This is ca near palm springs. Looks like recently updated and I actually think those rents are about 5-10% under market but thats sort of going off track. Its in good-excellent condition with tenants in place and not too old, like 87. b or b+ neighboorhood. I have 20k but letter says i need 32k down. I really want this for myself but I might lose out completely because I just dont have the money down. If i can make some money instead of no money, that would be good. I think it can be flipped very fast at 210-230k.

Thanks, anyone know if any other options?

If you have a short sale under contract but the bank has a provision that the contract can not be assigned, can you get around this?

Like andy said, lenders usually have a minimu loan amount and the owner occupancy ratio typically has to be above 51%. I was going to buy a condo in Hemet, ca and the numbers worked really well but they would not lend on because the owner occupancy ratio was too low. Check with your mortgage broker first.

That being said, does anyone know if you can buy cash then refi and not have to worry about this critera?

The way I understand it Sarah is that the loan is based entirely on the performance of the property. Your own debt does not matter but your own debt could affect your credit which is part of the decision making process. The ratio they use for commercial loans is debt coverage ratio. Which is how much income the property produces compared to the debt service. Net income/debt service. Usually you need 25-30% down with 1.2-1.3+ dcr. Atleast this is what my books tell me :P

This is actually out of state. I live in Beaumont but am looking at out of state properties and crunching some numbers. Looking to start putting down offers in a week or so. I will have to do the research on the hoa. It is low for the area, most are 170ish in other condo complexes close to there. I will have to also have to clarify with my mortgage broker on the loan issue. I do like 20% -30% down for the higher coc even though it is considered higher risk. I do think there is a lot of investor owned condos in the complex but the rent demand is high so i need to do some more research when i visit the area. Appreciate the feedback.

Property price 22k condo turn key or very minor repairs.

Analysis
Low side of rent 600/mo

P and I with 4400 down 95/mo
Property Management 60/mo
Vacancy 60/mo
Maintenance reserve 60/mo
Taxes 30/mo
Hoa 135/mo
(Hoa includes water, trash, sewer, insurance, exterior and roof maintenance.)

Gross income 600 - expenses (including p/i) 440 = 160 Cash flow

Annual cash flow 1920 / initial investment 4400 = 43.6 Cash on Cash return.

Some things I am concerned with is that the expense are above 50% of gross rents. 345/600. The thing is I wouldnt be worried about Roof or exterior maintenance so would my 10% maintenance reserve cover the maintenance costs? Anyone know if these hoa insurance policies are sufficient or do you have to supplement it?

I never said they werent available in CA but they are hard to find are in really crappy neighborhoods from what i can find. I asked where are you finding these deals? I can find these sort of deals in places like desert hot springs (very bad area.) If there is something within 5 hours of me that has the same cash flow as spots like vegas and phoenix, Im all ears. This thread seems to have turned into a CA vs out of state argument which isnt my intention. I appreciate the suggestions. I like the ideas of going with the listing agent.

Yeah thats what i was thinking curt.

Where is california are you seeing properties that can do the 50% and 2% guidelines?