All Forum Posts by: Account Closed

I didn't drill down into the details, but the low down payment is likely for owner occupied.

I joined several credit unions in Escambia County as a safe way to invest locally and the loan programs all differ. I've seen various types such as homeowner, HELOC, land, construction, vacation, reverse mortgage, and investment property loan programs, but I don't know how they compare to loan money from other sources.

https://www.locavesting.com/how-to-invest-local/bank-local/

I notice Pensacola Habitat for Humanity has a home purchase program for Escambia and Santa Rosa counties (with income minimums and maximums). Qualifying participants have to demonstrate the ability to pay $450-$650 a month for the mortgage and the mortgage interest rate is 0%. Part of the deal is a long-term partnering arrangement involving sweat equity and volunteer work to help other people buy a home.

I grew up in rural Upstate New York and my parents were members of the local milk producers cooperative (which as a kid I knew as the "milk station" and "feed store"). I'm used to the idea of neighbors helping neighbors (the fire department was all volunteer). To show support, I joined the Ever'man Cooperative Grocery & Cafe in Pensacola, although I don't shop there as often as I should.

Let me answer with a parable.

My favorite class in business school was Entrepreneurship and Venture Initiation. We had a guest lecturer talk about SBA loans. One of the students asked about the requirement that someone had to be turned down by two banks before they could apply for an SBA loan. The lecturer answered by saying if someone didn't know how to get turned down for a loan by two banks, they shouldn't be thinking about starting a business.

I was a motivated seller who wanted out of my run-down home. My realtor ran some comps and I was happy with the price (her price was higher than the price I had in mind). Going in with a rationale for a price might make things easier if the seller takes issue with it.

• Do you live in California? No
• Have you lived in California in the past 5 years? Yes
• If so, where? San Jose
• Will you be staying or leaving? left three years ago
• Why? retirement and change of pace
• What is your full time income producing job? investment income until I start Social Security at age 70

I had K&T wiring when I purchased my house in the 1980s and my insurance company gave me a hard time.

I replaced the fuse-stat box with circuit breakers and the electrician doing the work said if I left K&T alone, it would leave me alone (many older homes in the neighborhood had K&T). He also said if I needed to add any outlets, he would run new wiring to those outlets from the circuit breaker box but leave the K&T as is. His take was splicing into K&T is what causes problems. My insurance company dropped the matter.

The K&T was still there when I sold my house in 2015 (I fully disclosed it in the selling documents).

The only items I couldn't "as is" out of when I sold my California home were the water heater had to be seismically strapped (many fires start after an earthquake topples the water heater) and the CO and smoke detectors.  The buyers rehabbed the house and turned it into a McMansion, so I imagine they replaced the K&T.

I hope these credit unions know what they are doing because they appear to be helping to pump air into any bubble that might be forming:

(1) One local Pensacola credit union (Gulf Winds) is currently offering 100% financing on mortgage loans.

(2) One of the national credit unions (Alliant) is offering 0% down for "well qualified" first time home buyers and 3% down for non-first time home buyers.  It also offers a "cash back rebate program" for buyers and sellers.

DISCLOSURE: I'm a member of both credit unions.

My barber in San Jose moonlighted in real estate (his wife was a licensed real estate broker [now retired]) and I got insight into the Santa Clara County real estate market. He also had discussions with his clients who were moonlighting in real estate (some successful, some not so successful).

I take the trust-but-verify approach no matter who or where I get my information.  If I'm going to be one heart beat away from poverty, I want it to be my heart beat and not someone else's. When someone with long-time skin in the game talks with others who have skin in the game ("The Wealthy Barber" or BiggerPockets), the source is informed (and credible) and the information is worth my time to investigate further.

https://en.wikipedia.org/wiki/The_Wealthy_Barber

My barber in Pensacola has been investing for a few years and tells me he owns three homes (I know he recently sold one for a nice profit). He also tells me he believes Pensacola proper is developed (little upside potential) and the areas surrounding Pensacola today are where Pensacola was 15 years ago. I don't know if he is right, but the information is a good starting point for my market due diligence.

My barber in Pensacola moonlights as a real estate investor and tells me people from the Northeast come to Florida to buy homes for cash and are willing to pay a few thousand more than the asking price to get the deal.

When I lived in high-cost California, promoters would stop by regularly to advise us to consider states such as Nevada, Arizona, and Texas for investment because we wouldn't believe how cheap house prices were in those areas.

All of this is anecdotal, but it points to people selling high in high-cost areas and buying low in low-cost areas.

When I sold my California house, the buyer payed cash and showed a copy of his bank statement to prove he had the money. My realtor dealt with his realtor to screen the offer. I just briefly saw a copy of the statement when I was selecting which offer to accept.

When I rented my Florida apartment, the landlord wanted a copy of my savings account statement to know I had the money (a year's worth of rent), since I was retired and had no income. 

I've looked at using a PAL (secured by marketable securities) as a potential rainy-day reserve fund versus using credit cards (secured only by my good credit) or a HELOC (secured by real estate) to cover emergency expenses.

The risks to the borrower are different. If the stock market tanks, the PAL can liquidate the portfolio at any time to meet a margin call (Federal Reserve requirement). HELOCs can be suspended by the bank if the real estate market tanks (https://www.biggerpockets.com/forums/519/topics/243053-when-does-a-bank-recall-a-heloc-or-mortgage). All types of debt have to be paid back eventually, either by monthly amortization or interest only with a balloon payment at the end.

My FICO score suffers because I have only one type of credit in use (credit cards). I paid off my mortgage and HELOC years ago and I haven't had a car loan in years. Perhaps diversifying your credit types might help your FICO score if that is important to you.