All Forum Posts by: Rick Albert

I was in discussion with a wholesaler about a property and it dawned on me, since he doesn't yet own the property, if I were to enter escrow, is it even binding?  For example, if we are under contract, could the wholesaler cancel the entire deal and I would have no recourse because he doesn't own the property to begin with?

Just wanted to get everyone's thoughts.  I would imagine it all depends on what is in the contract.

Thanks!

Hey James,

The best thing to do is look at the comps that support your $1500/month and see if they have dishwashers.  Without studying it and knowing you are going to have families, on the surface I would recommend it.  In my case, it was only going to be two people max, so having cabinet space, we felt, was more important than a dish washer.

Good luck!

Rick

Have you thought about selling directly to the tenants?  If they have good credit and you had reviewed their bank statements to make sure they had enough for the deposit, maybe there is a deal to be had for both parties.  If you do the deal, you save on the commissions.

It is case by case.  Are you selling one home and the purchase is contingent on this sale?  If so, if it is in the same area that can be a tough presentation for the Seller of property #2.  Otherwise the choice is up to you.

I used the FHA 203(k) loan for my property. The problem is if you assign a contractor, you have to use that one for the project. There are pros and cons to using this type of loan. What my wife and I ended up doing is remodeling the house with an addition and converted the garage into an Accessory Dwelling Unit (permitted and rentalble guest house with separate address and electrical meter). We are moving into the ADU and renting out the main house. I am in the Los Angeles area.

There are downsides to this type of loan and happy to discuss it with you or anyone else on the forum.

Although I tend to focus on a little bit of everything when it comes to real estate, people have said my articles have been useful.  I am going to publish one on house hacking in about a month.  I own two properties and have been house hacking my way through.  I would get educated on the market you are living in or wanting to invest.  That is the only thing that is holding me from investing out of my Los Angeles area.  If I am going to invest somewhere, I want to know it inside and out.

My website is rickalbertonline.com and would love to get your thoughts!

Another thought is certain lenders will drop the PMI but raised the interest rate. The payments may be the same, but you can write off the mortgage interest for tax purposes but not the PMI. This means you have a larger write off (more money in your pocket). You will need to seek proper tax advice as every situation is different.

I didn't read all of the posts so I apologize ahead of time if I reiterate what others are saying.

My best guess is that (1) those in government truly think this is a protection measure or (2) is areas where I live, Los Angeles, there is a high rental population.  This means from a constitute standpoint (aka voters), government officials want to appease those that will most likely vote for them and ultimately keep their jobs.

I do firmly believe this will raise rents.  For one, it will scare people out of landlord market (I know someone who wants to sell their rental and buy in Arizona, just waiting for the existing tenants to leave), thus decreasing supply.  The second is (which others have said) that landlords may hold out for higher rents to compensate.  At some point tenants will have to give in if they want to live in a particular area.

Hey Bigger Pockets People,

If a borrower is buying a property and plans on using roommate income towards their DTI (Debt-to-Income), according to Home Ready you would need to prove it. How could a first time home buyer utilize this? I only see how this could be useful if you are refinancing a home you already own or buying the next one.

This is the pdf from Fannie Mae with more information: https://www.fanniemae.com/content/fact_sheet/homeready-boarder-accessory-unit-income.pdf

Any guidance would be helpful.

Thanks!

Rick Albert

@Sean Larsen, that's a tough one, as it varies on the area.  Here is what I look at (for Los Angeles):

• Rents versus Cost of Ownership: For example, condos used to be a great deal.  Now, if it is for owner user, it's fine, but as a rental, the numbers don't work.  For single family homes, it's about break even depending on how much you put down.
• Cost of construction and building demand: This is a big one, it's too difficult and expensive to build in LA.  Therefore, only luxury properties are being built (cutting out a major segment of the buyers out there).  If costs were lower and there was land to build, then that might be a different story (because of supply vs. demand).
• Look at jobs/unemployment numbers:  Major companies are coming in and expanding (such as Google, Netflix, etc.).  This not only increases housing demand, but these are higher paying jobs, which is better for those who already have properties.  I have a client who is renting their Accessory Dwelling Unit (a 350 square foot detached studio) for $2,150/month!  If people are working, then consumer spending and confidence goes up, and that applies to housing.

To be honest, I would just look at how long you plan on owning the property.  I sold a tear down for almost $1,500,000 and they bought it 20 years ago for about $500,000.  They owned the home through the recessions and clearly did fine.  If you are looking to buy as a rental, if the numbers work, then it works.  Don't take unnecessary risks.

Hope this helps!