All Forum Posts by: Alexander Zurn

@Vincent Prentice that is the right thing to do, price out both options.

@Candace Postell raises a good point too, consider what will add the best value for the least amount of money. i.e. consider what the buyer will be focusing on in the kitchen. If you repaint the cabinets and it takes 8 hours but you save money there so you can buy the granite counter tops/higher end appliances that may attract the buyers quicker thus reducing holding costs, you might be better off repainting. Opportunity cost is important to consider.

@Delmas Edwards AVM (Automated Valuation Model) is an mathematical model that analyzes properties based on comps. Investors/Lenders use AVM for two reasons: to determine the real time value of a property based on a computed model and to reduce to the cost of determining the real time value of a property.

What separates (in my opinion) AVM from Market Value is that AVM does not consider the condition of a property whereas Market Value is highly based on the condition of a property. With that said, I think the biggest difference is that AVM can run all the numbers objectively while Market Value delivers a more subjective analysis.

A mix of both is the sweet spot, of course as we all run numbers, comps, etc. while considering the condition of the property relative to those numbers/comps.

@Vincent Prentice as I'm sure you're aware cabinets can be very costly in a rehab/flip. In my opinion, I think you should re-paint the cabinets and get new hardware for them. This is substantially less expense than all new cabinets and, hey, at the end of the day if you don't like it (which I doubt) you'll only be out the paint and hardware.

Search youtube for videos of reusing & painting cabinets. You'll find everything you need and I bet the results will surprise you!

Good luck

@Brooks Foster try LoopNet.com - plug in your area - search previous sales. It is like Zillow, Redfin, Trulia but for Commerical Property.

@Michael Clayborne yes - you could do that. In order to do so, have your agent include a contingency stating something like "this offer is pending my approval of seeing the other unit."

While this will cover you, it would be better for you to just see the other side. Ask your agent to arrange this as quickly as possible. If you have done your homework and the numbers work, all you'll need to do is quickly go into the property and look around (as thoroughly as possible).

After THAT, you'll also have a regular inspection contingency in your offer. This is when a professional home inspector inspects the property. So IF you haven't seen the other side prior to the home inspector and you see that you don't like it after the inspection you are still legally allowed to pull out of the deal and get all of your money back (except what you paid the inspector).

Also - be sure to ask your Loan Officer & Agent about Oklahoma First Timer Home Buyer Program. A simple google search should bring you to their site. A lot of states offer great rates and some even offer down payment assistance so that you pay zero out of pocket (outside of a few fees like inspection, appraisal etc.).

Good luck!

@John Menton yes, you and him can both go on the loan. Your income will be used to qualify and you do not have to live there. FHA obviously requires owner occupancy but when a co-borrower does not intend to live at the property FHA classifies it differently. Essentially it has to meet 75% LTV.

HOWEVER, if you are blood related, you can still achieve maximum FHA financing (96.5%). See below regarding FHA Loans and Non-Occupying Co-borrowers

"In cases where not all the borrowers will live in the home full-time, the loan is classified differently. As a result, there are different rules that may affect the mortgage.

According to HUD 4155.1, Chapter 2 Section B, A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).

Borrowers should take note of some exceptions to that 75% limit which are based on family-type relationships.

Borrowers are eligible for maximum FHA loan financing for non-occupying borrower situations for FHA loan applicants who are related by blood, marriage, or law. Chapter Two describes these relationships, which include (but may not be limited to) the following:

• spouses
• parents
• children
• siblings
• stepchildren
• aunts-uncles
• nieces-nephews"

@Jeff B. that must be bad then if it went down so drastically. It's strange to see such drastic declines in the city. With that said, it is a very small city with not much going on in it (to my knowledge). I take it you would not invest there?

@Jeff Keller yes - that is where I saw this info, on the property assessment website. But this occurred in 2013, 5 years after 2008. So you think there could be a notification available explaining why this procedure took place?

I am looking at properties in Warren, RI and multiple properties land value substantially decreased in 2013, between 15-30k! I'm just wondering what would explain this? The price has stayed the same through the 2015 assessments.

That's scary to think one year your property is at its peak and you're thinking of selling, then  a new assessment comes in and drops the total assessed value by $30,000.

I understand that the assessment is not what drives the price but some people (hopefully many investors) give it a look when considering a property.

This also seems to be consistent throughout the small city of Warren - not specific to 1 property.

Thoughts? 

@Alex W. a friend once told me to just consider the PMI in your analysis. If it works with the market rents that you've established, your tenants will be paying for it. Therefore, you can get the property for a very little out of pocket. Once you reach the 20% threshold, refi and enjoy the remaining cash flow with out ever having spent your own money on the PMI portion.