All Forum Posts by: Jason Eyerly

 I believe the reason anyone does this at all is to make money, so I'd have to disagree with you there. Anyways, are you saying that when a company charges you a higher rate or requires a larger down payment because you are a riskier loan than someone with good credit, they are setting you up for default? That sounds pretty ignorant to me if that is what you are saying. Giving a higher risk applicant the loan to begin with is solving a problem for both sides. They need a house but don't have the credit, and you need to sell it. 

I don't believe what I said was shady. Last time I checked, if you default on a bank loan, they do not give you your down payment back. Asking for higher interest isn't shady either, you deserve to be compensated for taking a higher risk. No different than how a credit card works, and I'm sure most of us have one of those. I personally don't believe in just taking a loss, rather coming up with a creative solution. You said yourself you can make it cashflow positive. As Robert Kiyosaki said it's about building cash flow and your assets. If you can make this thing positively cash flow with a further investment, why not? Selling it cheap to get out is just going to let another investor come along and do everything you could've done yourself. 

 Stupid is as stupid does. Darwinism is what it is. However, to suggest that you "take your losses as a man"? What does that even mean? How do men take losses as opposed to anyone else? Lastly, why take your loss when you can come up with many creative solutions to avoid taking the loss. He could fix up the property and hang on to it with a positive cash flow, and see it appreciate ten times over. Markets move in cycles, housing included. 

 You can't have everything you want. If you don't ever want to deal with any issues, as it sounds like you want to kick back and never think about it or deal with it again, then sell it. That's clearly what you want to do, you just seem to be searching for someone to convince you or tell you that it's a best move.

 NOTE: I see interest rates increasing anyways as the Fed sees the market improving and reduces their bond buying program, eventually rates will begin to come up, that's just how it works.

Here's what I would do. I'm more of a financial market guy at the moment, but I like to employ the principles I use across all aspects of life.

Step One: You should analyze prices in that area over the past, say, 50 years

Step Two: Compare a property like yours to the national average over that same 50 years. 

Step Three: Plot out where your property or it's comparison fell annually in regards to the national average. Then, plot that on a line chart. Overlay on that exact line chart where the mean (or avg.) is.

Step Four: Plot on the line chart where you are now in regards to the national average and you will see where you fall in regards to historical and average pricing. 

Then you have a better estimate of knowing whether or not you can expect appreciation or depreciation, and how soon. In the finance world where I spend most of my days we use this same approach on the volatility (how much a stock moves) to calculate over a historical period whether volatility is high or low to help us decide whether we should be buying or selling.

On a further note, when we have a losing position, we try to reduce losses and bring in as much of an income as possible, so when the stock eventually reverses and moves in our favor, it reduces our cost basis and eventually we can at least get to a breakeven.

So, for example: You own it at $185k and can sell it for $165k. You need to create $20k in income to reduce the cost basis to $165k. So what I would suggest is that at your current rate you do a FSBO, at $165k, require 10% down which is $16,500/$20,000, find a family with less than stellar credit that still needs a place to live, just got roughed up by the economy, attach a "premium" for giving them the loan ($3,500) which you could even throw into the mortgage payment over time, and attach a slight interest rate boost for the added "risk" of taking them on. I'm not sure the specifics of Dodd Frank but this all sounds possible to me.

This leaves two scenarios:

1) They default but you still generated 10% and you repeat the process. Further extending your credit received on the next trip.

2) They end up buying the house at $165k, but you make enough money on the interest boost over the standard high credit loan that you end up bringing your cost down to $165k. The property values appreciate, and they have a home with equity and are happy as can be, and you walk away at a break even. Even if they don't appreciate it's no skin off your back. 

Hope I helped! I'm not super experienced in real estate but I like to give my two cents and try to help where I can.

Regards,

Jason Eyerly

I will be there, +1!

Hello Everyone,

So I've finally relocated to New York City. Hurray for that! It's been a lot of work and a long time coming for me to get into my new career. I've been on Biggerpockets, actively, for a long time now and I have learned tons of new information. My goal is to take a majority of the money from my new job and begin my REI here in Manhattan, but I'm not sure exactly how to go about it in Manhattan.

    My career as a professional trader means I will only have free time outside the hours of 8:00-4:30 so the idea is that while I would get things rolling, the real estate would be left to my fiancee once she obtains her license here in New York City. While we build capital to invest with, she will likely go to work for a brokerage to learn the ropes and how things work.

   All that being said, we both have excellent credit (750+) and I have a six figure income, plus whatever she makes, and we are going to be married in September. I'm not sure how to begin investing in Manhattan because things are so much different here. I think I may be able to qualify for a regular mortgage, but with single bedroom apartments going for $500,000 to start I would think that I would be very limited in how many mortgages I could get to acquire properties to rent out, with bigger apartments as much as $3,000,000. We had considered buying a multi-family and renting out all the units we aren't living in for two years to acquire our first property, but the New York limits are all less than $1,000,000 far from being able to purchase a multi-family. 

So, after all the blabbering and information, I guess my questions are these:

1) How does anyone obtain a property with an FHA loan in New York City?

2) How many mortgages are you limited to? I've been told it's 4 even if the units are rented and showing a positive cash flow, and the best idea from there is to look into a HELOC to put down payments on further properties.

3) Is buying fixer-uppers with loans, private funds, or HMLs viable in the city as well assuming you can still get the properties at 70% FMV or less?

4) What's different? What's more difficult? What's easier?

5) Are there any recommended REI groups in Manhattan?

Thank you so much to anyone who offers help and advice. It's much appreciated.

Best Regards,

Jason E. 

I'm not in your area but I am a renter and have been for a few years now. I can tell you that I would not rent a home that didn't have appliances. Most people who do not own a home, do not own appliances. Then it's just one more expense for them to get moved in, and typically after a move a hefty chunk of change to spend on buying some is not an option. Also I have had issues with my landlord and when I was ready to go, I would not have wanted to haul a bunch of appliances down the stairs and into/out of a moving truck. While this is up to you, I think it would cut your potential tenancy in half, less you plan on scanning the market for renters who've recently lost their homes.

I'm taking my state test next week, and I'm planning on having the license to start listing!