All Forum Posts by: Valerie Pedigo

Well, it's just that the reserve requirements are heavier for the 5-10 mark.

For up to 4 you need 6 months on the subject and 2 months on each additional financed property. For 5-10 it is 6 months subject/6 months each additional financed property.

Also - 720 mid FICO, 70-75% LTV depending on units and cash out.

Liquid reserves can also include semi-liquid reserves like 401K, IRA, CDs, whole life ins policies, etc.

Jon beat me to it.

What you are looking for is in the wholesaling forum.

Your first example is correct: if you have a property with ARV of 100K, the repairs are 10K, and you want to make a 10K fee - you would have to get it under contract for 50K.

Since you are dealing with REOs and can't assign the contracts, you would have to write your end contract with how you want the closing costs divided, etc.

I think you are over-thinking it just a tad. If an end buyer agrees to buy you property, you collect a deposit and get a contract signed. The contract would be for the 60K and you would be paid your 10K at closing. Your fee would be reduced if you are prorating the taxes, paying your attorney, etc.

If the repair costs are higher - that is not your issue. Your buyer needs to do their due diligence about the property. But, keep in mind that you are setting your price based on your estimate or your contractors estimate and they should be very close in the end.

Just FYI - you can purchase a multi-unit, rent it out and qualify for the credit. You just have to occupy one of the units for the 3 years. (Now you would have to decide if you want to live next to college students.)

What do your comps say? If you are looking to cash flow $100-200 per month fully rented you are going to have to get it well under asking (closer to 75K), grieve the taxes, and bump the rents a little. You have to be pretty strict with your numbers because you can't expect appreciation any time soon in MI and you are looking to hold anyway.

Any other details or recent comps you can post?

I was thinking that too. I would come in at least 20-30% lower than your analysis to gauge his reaction. He doesn't seem motivated.

That is a tough call without the numbers.

I made an offer on a package like this - same type of situation: some SFR and some multis. I offered on the entire portfolio because the SFR I could flip in a few years or sell on land contract and the multis I could keep for cash flow. The seller was willing to hold paper on it too - I made sure we were on the same page on the interest rate and terms of the financing before I made an offer. (And I wanted to make sure she would release the SFR when I sold them.)

It is strange that he doesn't even have a ballpark on the price or financing? He may not know what they are worth.

On the other hand, you may be doing the research for him. If you put something together he may use it as a starting point for other offers. Has he talked to anyone else besides you?

Jawsette,

The requirements are for mortgaged properties. -Not properties owned.

The old policy limited financed 1-4 units to 4 when the new loan was secured by an investment or second home.

A SFR would be a 1 unit. So, the maximum total financed properties (including your primary) is 10 when you are looking to finance an investment or second home.

These guidelines do not apply if you are financing your primary residence. They also don't apply if your properties are free and clear.

Hope that helps,

Valerie

Jon posted directly from the source. Technically Fannie Mae allows 10, but several lenders' legal departments are still not going over 4.

Congrats! That is awesome - hope her application checks out well! (With all that immediate interest, maybe your rent is too low ;))

How are you determining the amount per dollar of rental income?

If you are looking at the max price to pay for a long term buy and hold - take the rental income and divide it by 2%

Example - $600/.02 = $30,000

Your example based on your assumptions doesn't fit in the 50% rule - monthly rent = 600/2 = $300 - debt service of $264 = $36 of monthly cash flow.

Not to say you have to follow these rules, but I don't know what you are trying to accomplish. I'm sure someone else will chime in.

What's your investment strategy?