All Forum Posts by: Zach Wain

New construction for your first home transaction, yes I think that is putting the cart before the horse.  They are more complicated than they seem, and they already seem complicated

You can have more than 1 FHA loan at a time. But, FHA will not allow for a true rental property. Only primary homes, but FHA is definitely the best fit for a primary 2-4 unit home...

@Antonio Cypert - The 2-4 unit house hack is an option, but multi units can often be more expensive so you need to save up more money for downpayment due to the larger sales price, and if you are buying a more affordable multi unit you may have repairs and reno that needs to be done. Also, in Phx finding a SFR will be far easier than finding a 2-4 property.

Consider buying a primary SFR home and live in the property for 1 year (that is all that is required for living in the property, than you can rent it out and buy another primary home). 3% down for conventional loans first time buyer, or FHA with 3.5% are both solid options for loan products. You get the best financing terms possible and after 1 year you can rent the home out and buy another property. You can do this 10-11 times and still get A+ primary loan terms and low downpayment options.

@Clifford Datan I imagine the interest rate and fees on a 10% down investor loan are quite high, and it would be a good question to ask about a pre payment penalty as well.  Keep in mind if real estate values pull back 5%, you may not be able to refinance at all with only 10% down initially...  You may be stuck with that deal for awhile.

Also - keep in mind as investors are frequently leveraging with HELOC's, HELOC rates are tied to the Federal Funds rate, and those are going up a lot this year. HELOC's are not standardized like a conventional loan, so you may get some teaser 6-12 month intro deals, but everyone needs to remember its not a 100% guarantee that you can refi into better terms in 6-12 months. That is assumption, and hopefully that assumption works out.

Leverage is a great tool - but use it wisely...

If this first lender has impounds than the 2nd/seller carry should not worry.  But to your point, if I was the seller carrying a note I would ask for them to impound tax/ins on the first.

@Erik Sanders

1) Yes, you need to tell the DSCR lender about the loan. They will count the payment into your DSCR calculation, and make sure that they allow for 85% Combined LTV. They may have additional price hits, maybe not. But yes, you need to tell them because they will eventually see the papertrail of money.

2) To be done properly, the seller and you should sign a mortgage Note specifiying the loan size, rate, and repayment term.  You and the seller need to work on that, but all you need to do is ask title to prepare a Deed of Trust and they will record it for you.  Making it an official loan.  That way, when you go to refinance, its a non cash out refinance which is much easier to complete on a rental compared to a cash out refi.

This type of financing is perfectly fine, as long as it meets the lenders CLTV requirements. Seller carried 2nd mortgage is 100% ok as long as it fits in the lenders eligibility matrix.

One issue with some Condo complexes during resale is passing the Fannie Mae/Freddie Mac "warrantable" standards. These have relaxed a little over time, but every conventional loan is required to get a Condo questionnaire from the HOA/property management company. If the condo has serious litigation against it for example, a buyer may not be able to purchase the property. Or, if its a rental purchase and there are too many non owner occupied tenants already, it could be denied. Or large single entity ownership. Etc etc.

Likewise, for a FHA or VA buyer, they must be on the FHA or VA approved condo lists. There are some "spot approvals", but those are less common.

IMO, that is a major reason why condos do not appreciate as fast as a true townhome (Single family attached)/PUD/SFD home. Note - many properties that appear to be townhomes are actually zoned as Condominum projects. Its cheaper and easier for the builders. Do your research before you fall in love with a townhome!

100% - "Assignment': You are not selling a property, you are selling your beneficial interest in the contract to buy the property. So your assignment fee 'IS' your profit,"  With an assignment for contract you never actually own the property.

@Account Closed "Actually, it’s not even technically an issue of taxes. We simply need to start paying what water is worth as opposed to what we are used to paying"  100%!

It has nothing to do with politics, fiscal responsibility, etc. Although it costs a lot of money to fix the problem, water is the most important resource on earth and for whatever reason we live in a desert.  We have to fix the problem, and since people like to live here we need to pony up and solve the problem with a multi faucet approach

@Addison Watson that makes sense.  Desal plant seems more likely, albeit expensive and tons of red tape there as well.  I think everyone under estimates how much of a water problem we have, because water flows to our sink every day.  If we ran dry for a day or two, we would move mountains, rivers, oceans, to solve the problem.