All Forum Posts by: Ryan Keenan

I can't tell you exactly how to know it for the properties you are looking at in your market. Practice and experience.  I know my market well enough and have done enough deals to estimate fairly accurately for any property I'm looking at...  a combination of having looked at hundreds of properties over the past 7 years and having purchased over 50 of those individual properties. 

If it's listed near appraisal or ARV, offering way below asking is probably going to make it tough to get a deal, especially in today's market. I wait for something that is listed at an ok deal, then try to make it a great deal, or go for off market.

I am incredibly patient while waiting for the right deal, and then incredibly aggressive to pounce when it's there. I am the tortoise then the hare. I have spent nearly a year looking before when I was ready to buy.  And I have put a set of 3 duplexes under contract before other people even got their email notification that they had been listed, even when I wasn't certain where the down payment was going to come from.  Macro patience, micro speed.  Especially in today's market. Wait for the right deal, and when it's there you have to move fast as possible. 

@Ryan Keenan - If something appraises for $200k, my bank will lend up to $140k, so long as I'm putting a minimum 10% of purchase price down.  

So if I buy it at $155k - I put $15,500 down, they lend $139,500 

If I'm buy at $160k - I have to put $20k down since $140k is max loan.

If I buy really well they will roll closing in as well. Say I get it at $150k and there's $5k in closing for $155k total, they'll roll the closing costs in. So again I put $15,500 down and they'd finance $139,500 and I don't have to pay for any closing costs. 

They'll do the same for as improved.  They will appraise it as if the work is done and lend 70% of that value with minimum 10% down of everything again.  That 70% can include carry, closing, rehab, and purchase.  So say I buy something for $600k and I need $180k for rehab, carry, & closing.  $780k total all in.  If it appraises for $1mil as improved, they'll lend up to $700k so I just need $80k up front for everything. 

I buy with 10% down with my bank, portfolio lender... so long as their max LTV is 70%

I believe Fannie Mae has a product that will let you buy SINGLE family units for 15% down (not 10%), though probably at a significantly higher interest rate than their normal conforming loans.

My earlier comment wasn't questioning the LEGALITY of 10% down for non-o-o, just the SANITY!

Hi Ryan - here is how Fannie and Freddie treat this -- if you are departing a current primary residence and buying a new one, you must provide the lender with a copy of the fully signed, executed lease agreement for the tenant that you intend to rent the property to, along with proof of receipt of the security deposit or first month's rent from said tenant.  The lender will award you with 75% of the rent as qualifying income. No management history is required for this.

Only your primary residence housing expense is included in front end debt ratio (inclusive of taxes, insurance, hoa and/or mortgage insurance; that expense divided by gross monthly income). All other minimum monthly payments per the credit report + the front end are included= bank end DTI ratio. There are some nuances, but this formula will give you the right numbers 95% of the time.