All Forum Posts by: Carlos Valencia

Hello Carlos, 

Its really going to depend on your personality. You have to find what fits you best. I would suggest maybe find someone who is willing to mentor you and take the time to learn from them. Explore as many areas in real estate investing as you can and once you see something you might actually enjoy doing then go all in and become the expert in that field. Find out your why in order to see what is the best choice for you. 

@Albert Bui @Matthew Kwan

 Hello Jerome, 

Have you ever used an FHA 203k loan before? If you have not theres some things you need to look out for that can help speed up your process. 203k loans since they deal with rehabbing you will need to make sure your contractor is already certified 203K contractor. There are also many disclosure forms that you will want to fill out ahead of time as well amongst many other forms. You will also need to find the right seller that is not in rush to sell the property and is willing to work with you on how long you can be in contract as this type of loan can have unexpected delays with so many other moving parts. We are very familiar on how this 203k loans are structured. If you would like to to go over in more detail how this loan works I'm happy to connect.

@Albert Bui@Matthew Kwan

if you have 300K to invest and you can only afford 2500 in payment PITI all in that means you need to at least make 5k gross per month assuming no other debt. You can possibly get a property thats about 600k or less. If you are flexible in moving and are just trying to begin your investment journey I would say house hack is the best way to go. Dont look for your primary at this moment. I would look for a single family or duplex around that price range and house hack. Then rent out the whole house or duplex and try to do it again to acquire your next unit. If you can avoid Condos even better so you dont get stuck with HOA dues.

@Albert Bui @Matthew Kwan

Hello Anant, 

I would also suggest option 1. You already have a property paid off and you have the down payment for your next property. Yes you can maybe buy 2-3 more units if you sell the property your mentioning but why not cash out refi and then use that money to invest in other properties? If you say you found some really good cash flowing deals make sure to really look at the bigger picture and run the numbers on all 3 scenarios you mentioned above. This way you can come to a better conclusion and see which makes the most profit. Good luck on your decision and investing journey.

@Albert Bui @Matthew Kwan

Hello Steve, 

If the area your in does not have any units that have the ability to cashflow or at least break even I would recommend looking elsewhere so you can get the most out of your investment. Unless your looking to buy and hold for appreciation over the time. Another option if you want to stay locally is house hacking where you buy a single family home or multi unit and live in one of the rooms or units. This wont cashflow right away but it can potentially allow you to live for very low cost on your end while your tenants pay for the majority of your mortgage. If you do this option of house hacking make sure that when you leave you will cashflow otherwise it wont be a good investment. 

@Albert Bui @Matthew Kwan

Hi Armando, 

First thing to find out is do you have enough equity to take out a heloc on your current property to help you for down payment on your next property? Do you know where your buying next and how much do you need to for down payment. 

If your not planning on living in your next investment you will need minimum 15-25% down depending on how many units your trying to buy. 

Lastly make sure to look at your current debt to income ratio as lenders only lend you up 50% or half of your income. Will you have enough room in your debt to income ratio to get another mortgage for your next investment? Leasing out your current primary will help offset your current mortgage payment but will it cover all of it? Same thing to look for on when buying the next investment property make sure if it will be a long term rental its in an area that you will break even or cashflow. If you have other liabilities that will use up some of that debt to income ratio. Heloc payment will also count against your debt to income ratio. 

Overall assuming you have enough equity to pull from your current property and it will be sufficient to cover the down payment for the next property then it is a good option to use a Heloc. 

@Albert Bui @Matthew Kwan

Hello Aubrey, 

I would suggest to look into working with a mortgage planner or advisor who is experienced in working with investors and also invest themselves. They will provide the most knowledge and walk you though your deal to advise you and help structure your current deal. Same with working with a realtor try to find the realtor who also invest and works with many real estate investors. Working with the right people who have their best interest in their client can help you navigate this real estate journey of yours as well as attending other networking real estate investment groups locally. Maybe you might find a mentor within that local community as well. Good luck. 

@Albert Bui @Matthew Kwan

Hi Scott, 

Working with a mortgage broker is the best option as they can help guide you through all the different loan products out there. Finding a mortgage broker who is also an investor and works with many real estate investors will be a good source for you. Its also important to make sure the mortgage broker has your best interest and not just looking to win your business by selling you on rate. Find a mortgage broker who wont be afraid to go over the pros and cons of working with big banks and working with them. Lastly if your concerned about rates dont let that be the reason why your choosing the lender you decide to work with as rates are always moving so if someone tells you I can get X rate thats great and all but unless your already in contract ready to lock then thats when rate will be important and actually shop if you think someone can do better than the current person your working with. Good luck on your search. 

@Albert Bui @Matthew Kwan

Hello Lucas, 

In this current market the most conservative way to invest and start getting some experience in managing tenants is to house hack. You will still be negative but at least you'll have roommates to help you pay for the current mortgage. If you can find a house where you pay the least compared to renting your own 1 bedroom or studio apartment thats great! The goal when house hacking is to make sure that when you move out you will cashflow. Primary single family you can do 3.5% fha or 5% conventional down payment. Having roommates will also give you the experience of managing tenants. Its definitely a good way to learn from as your first real estate investment. You can also rehab while you live there slowly if need be. Good luck on your journey. 

@Albert Bui @Matthew Kwan  

Hi Jonah, 

Other than having the down payment of 100k theres still other factors to consider when trying to figure out where to invest. Theres many loan programs available to help you reach your goals but first you need to know your scenario more in depth to help advise to which loan product best meets your situation. 

Usually theres 3 main factors lenders look at when pre approving you for a loan. Income, Assets, and credit. If your looking to buy an investment in Simi Valley even to house hack you wont be cash flowing. But if your just wanting to buy for long term and wait for the appreciation and refi in the future to eventually cashflow then thats fine.

Lets just use the example of 800k purchase price to give you an idea of how the numbers may look. If you have 100k that 100k will need to be used to help cover closing cost plus down payment. Assuming closing cost are 20k your left with 80k. This means your loan amount will be about 720k. In todays market that estimated mortgage payment including taxes and insurance is about $5,760. In order to qualify for that payment someone needs to make at least 13k per month or 156k annually to qualify assuming no debt. 

Why 13k in monthly income? Because lenders typically use 45-50% of your income for your det to ratio to qualify for a mortgage payment.  This is the reality right now for many people who live in Southern California they need to make at least 156k weather combined or individual to stay here and buy a home. 

Next question is will you be able to get this single family home to rent out for at least $5760 to cover your mortgage payment including tax and insurance or will you be negative every month? Thats not even considering that lenders can only use 75% of rents to help offset that payment on paper. 75% of $5760 is $4,320 so on paper it will show your still negative. In order to be cash flowing rents need to be at like 8k to be able to net positive. If thats the market rent for a single family home and people are paying 8k then it seems like it would work. 

In order to invest to long term rentals its best to go out of state as the numbers are really hard to pencil out here on CA right now. Even in San Bernardino county is going to be challenging to find a cashflowing property. 

Good luck on your search! 

@Albert Bui @Matthew Kwan @Kin Meng Sio