All Forum Posts by: Vic Iyer

As a professional investor, this is the last time I am going to advice U on this project:

1. Investing $480K and hoping for a $50K return and hedging on an appraiser giving U a $200K bump and savy buyers looking at Zillow and feeling they are paying a 60% premium within 5 months is risky.

2. As a first project go for a smaller project. I am getting a sense of feeeling that you are getting emotional and trying to pull the trigger. 

3. After closing for $380K you are oing to invest another $100K in cash, time, and efforts . Seriously? Most optimistic return $50K for $480K cash, time, and effort. What is the pessimistic return? Think about it. Are you ready to rent it if it doesn't sell? What about the rent?

4. You are taking up this massive renovation project just at the beginning of hurricane season. You renovation time could get longer. 

Be conservative! That's the mantra.You have done a nice job with the number crunching. But seriously this is not the right kind of project for you to start! Don't feel bad or worried when U let go of one opportunity there are many more on the pipeline.

As a seasoned investor these are my comments:

1. Spending $108K in renovations for a $50K profit is a "NO" for me. Think about "Opportunity cost".

2. Appraisers and the buyers will balk at paying almsot $200K over the purchase price within a span of 5 months. Watch out.  

3. What if it sells only for $525K? You did all that work for $25K? Again a "NO" for me. 

You are an ideal couple for real estate investing but picking a wrong project to get going.

Remember, When your tenant is filing their tax return they are indeed going to put the current address as the place from where they are filing the return. This address would be same as yours so that would draw attention.

IF the tenant is making by check (Which is normal) it would show deposits on your bank account. This is another evidence. 

MY suggestion, is play by the rules and avoid committing a fraud. I am not sure what kind of CPA would suggest committing a tax fraud.

Well, it is Hubzu therefore U will see wholesalers bidding like crazy to probably around 120K and then trying to wholesale it. So stick to your numbers. I have seen several auctions where the same property gets listed back in Hubzu because no one wants to biuy at inflated prices from wholesalers.

Remember, Quality is more important than quantity. Do not over bid. Study tha areas for atleast 6 months before pulling the trigger.

If someone asks “Is a plane crash imminent?”. “ Is a terrorist attack imminent” what do u do? Do U stop flying or traveling ?

As long as the home price levels are sustainable and lending practices are sane a housing crash will not happen. Market corrections are possible. Correction is different from a crash.

If a crash does happen, I would see that as another opportunity and make a kill. Disciplined investors should not have a problem as long as they stick to their numbers and keep ROI in mind we should be good

You are better off selling it without renting it. Easy to find buyers when they are vacant. The buyers who want to occupy will not be willing to entertain leasing

What could cause a crash?

1. IF lenders start lending recklessly (like no income verification, multiple loans with no down payment).  (Bleak)

2.A big disaster happens in a location like what happened recently with volcanoes etc. (Possibility)

3. A world war. If this happens believe there are other things to worry aobout that just housing. I don't think the super powers would be even interested in a world war .  (Bleak)

4. A localized event like what some people are talking about in Seattle. (Possibility)

5. If inflation spirals out of control forcing Fed. Reserve to bump the interest rates sky high. I don't think this will happen. Look at Japan and how long they have had their low interest rates. (Bleak)

Real estate is all location driven. The reckless loans of the 2005/6/7 are non-existent now. Lenders have been conservative in appraisals and require good down payment for mortgages. So even if the market drops 10% you won't see people foreclosing. I know people who bought 5/6 homes with no doenpayments in 2006 and foreclosed all of them. That is not there any more. We are trending towards normal market where the price appreciation will be in line with the inflation. Any one expecting a crash is going to be disappointed.

You should talk to the title company directly and ask them for title committment. They should be working with the lender directly. Have they ordered survey? That is important if this is a single family. 

Call Title company:

1. Ask title for EMD proof. Typically the title company would have spent $ for title search, estoppel etc. So there is some $$ that you would lose. May be around $500.

2. Ask them if they ordered for Estoppel. 

3. Ask them as to who is going to be the closer and their contact information. You need to pass on this information to your mortgage company. 

Remember the realtor is double dipping on buyer/seller commission so the realtor would have plenty of interest to get this deal done