All Forum Posts by: Zach Wain

@Charles Stubblebine a 1st mortgage paired with a HELOC will be the only option I am aware of. We have that combination that can you get to 90% Combined loan to value.

Without W2 income and only 1 rental property, you will either need a good amount of assets in your Trust's name (a living trust with $$$ cures all problems) or be 59.5+ yrs old with money in an IRA account. If that is not the scenario, a DSCR loan is the most likely option.

I agree and I think CPI by summer flips to 2% or even sub 2% and really surprises people.  PCE is tougher to predict since they rely a little less on housing metrics.  

@Brian F. - I would recommend you get your team together. Get your CPA in place, get your lender in place, get your realtor. On the lending side, if you have a free and clear home you have multiple options on how to leverage that properly. HELOC rates are rather high, but give you flexibility if you want to take your time and are not sure when you want to buy your next home. A conventional first mortgage will likely be the lowest rate/price structure, but there a lot of details to figure out. Do you live in the home currently, is it 100% rented out, etc.

Assemble your team and start game planning!

Hello BP'ers,

Today, another monthly inflation report came out, the nations December CPI.  Consumer Price Index.  Headline (total) inflation was negative, -0.1% M/M, which is a great thing to see.  Mostly driven down by food and energy prices.  Core CPI, which removes volatile food and energy was up 0.3%.  This is watched more closely by the Fed than headline CPI.  0.3% is a touch high, but 0.1%-0.2% M/M is what the Fed wants to see on avg, so overall, not bad.  Here is the real kicker, Shelter costs, which is about 32% of the entire CPI report was up 0.8% M/M.  It sounds crazy, but this was expected.  The metrics used by the US Bureau of labor statistics to measure housing/shelter costs is Bananas!  It lags real time data by 6-12 months.  But, this is the system that is place.

OER, Owners Equivalent Rent survey is a very lagging way to assess our housing costs, and that is 24% of the 32% of the Shelter component.  The other 8% is an actual rent survey, but its still measured in a Y/Y lease comparison so even that lags as well.

The Good news, is that in 3-9 months its likely that the Shelter component will finally flip to negative (even if home prices start leveling off and/or start moving higher).  My opinion, is that in Q3 the Y/Y CPI numbers will be sub 2%.  That is a bold prediction and most economists think 3.5%-4.5% range.  But, I think we will hit negative shelter costs, along with most other prices continuing to come down.  This assumes the supply side continues to open up and China does not shut down, or other curveballs cause supply issues.  The Avian flu is not helping egg prices right now for example.

For example, the past 3 months Core CPI minus Shelter is -1.0%.  If that trend continues and shelter costs start to flip to neutral or negative, we might get a nice surprise.  When inflation comes down, so do mortgage rates.  Q2/Q3 I think mortgage rates continue a slow trend lower.  I also think the Fed wants to fight mortgage rates from dropping too low because they do not want to stoke the housing market again.  Anything below 4.5% for a con 30 yr fixed and I expect the Fed to fight back, just a guess...  But since mortgage rates have 1%-1.5% to fall before that happens, we have some leeway.

It depends on your pay structure. If its the same every 2 weeks and stable, easy... If the pay is variable, than 12 months min is pretty normal. You can not do a DSCR loan unless you own a primary home, so that may not work. Without seeing your pay stubs its hard to say, but it can be a road block.

Salary = win!  Hourly at 40 hrs per week = win!  Variable pay can be tough

Also, in most states, it is extremely easy to close a loan in your personal name and than immediately move title into your LLC name. Conventional loans actually allow this as long as you are the majority owner of the LLC.

@Steve Sal what state are you in?

@Jordan Woolf - our most common bridge loan product is for the purchase of a primary home and using equity from the departing residence.  Currently, this must be a conventional loan on the new purchase.  We are not licensed in AL, so I can not assist you unfortunately.  If you need a referral for someone who has a similar product PM me and I will look around for you.

FHA or VA for Vets, by far the best option for 2-4 units properties!!