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All Forum Posts by: Charles Huang

Charles Huang has started 8 posts and replied 10 times.

Hi, i have a client that's looking for a warehouse in queens/brooklyn area, min 7000 sqt, budget $8 million, if anyone has a listing or referral let me know, more than happy to share commission 

thanks

What's the cost of borrow it from hard money first so you don't get outbid from those all cash buyers . Then after closing to refinance it through traditional mortgage channel ? Would that be ideal ?
I'm buyer myself, not going to resell it, please pm me, have fund and approval ready
Hi , I am buying a one family home, and would like to rebuild it from scratch, home is around 700k , rebuilding might cost 400k , I have enough 20% down payment and my dti ratios allows me at 800k conventional, Whats the best should I should do for this home? This is for my own use. Should I consider hard money for construction? Thanks

does FHA/203k requires you to live there ? i remember my mortgage broker was telling me about a loan which requires me to live there, however i already have a condo. thanks

Originally posted by @Chris Mason:

Welcome to another episode of MATH TIME YOU OLYMPIANS! with Chris.

@Charles Huang,

Bad idea to do this over and over again, even if you are going to honestly live in the place while fixing it up for the flip. 

FHA UFMIP aka funding fee. 1.75% of loan amount. Each and every flip.

Normally people finance this 1.75% FHA fee, and I do not equate the fee to discount points because you take the hit when you go to sell & random market fluctuations between now and then 5-20 years from now are going to matter way more than 1.75%.

But buying a property with the intention to sell it in a few months is very different. 

Pay the 1.75% out of pocket or finance it, either way you're paying 1.75 points for each flip. 

If the property and your owner occupancy is good enough for FHA, it's good enough for Fannie Mae 5% down.

Yeah, but that's 1.5% that you get back when you go to sell it because it's 1.5% more towards equity, not towards loan fees. You don't get an FHA funding fee back. It's just gone.

In general you should avoid any fee that is a % of loan amount when it's a property (or financing) that you will only be in for a short period of time. Go the other direction. Jack the rate up, take a lender credit. These are calculated on the assumption that the lender will collect from you at that higher rate for 7-9 years. So when you sell and pay it off in 6-9 months, you win and you beat the bank. 

For example, let's say you do Fannie Mae 5% down with a jacked up interest rate, and I put $8,000 in your pocket today by covering a bunch of the closing costs, for $100/month more in interest. And then you refinance (or sell), with $3500 in closing costs (or a seller credit to the buyer because this high interest rate motivates you to unload it quickly), 6 months later. $100 * 6 = $600. $3500 + $600 = $4100. $4,100 is less than $8,000. Boom, you win.

TLDR: The math never lines up to use FHA for a flip because you will pay that 1.75% no matter what in a flip scenario. Might as well identify some superfluous construction thing like a unicorn statue that will add $0 in home value but costs ~1.75% of (96.5% of the) purchase price, and go build that. Mathematically, by the time you are done flipping this house and counting your money, you will discover that using FHA is no different than building that unicorn statue and paying cash out of pocket for it.

Thanks for the clear explanation, i did not realize there was a 1.75% origination fee on the FHA loan, thus the better way of using FHA is multi family units and i live in one of them right? thanks

Hi , I want to do a flip on a house can I use fha to close ? If I decide to keep it can I refinance it in 6 month ? What would be the requirement on refinancing to remove the pmi ? Thank you

Post: Looking in queens Nyc

Charles HuangPosted
  • brooklyn, NY
  • Posts 10
  • Votes 0
I've been ready a lot on this forum now I have finally saved up enough money to start investing in multi family homes, any suggestions would be greatly appreciated , I have bit over 100k in savings

Post: New to real estate investing from NYC

Charles HuangPosted
  • brooklyn, NY
  • Posts 10
  • Votes 0

Hi, i'm charles , new to the real estate , looking to learn as much as i can from here and apply it in the real world, looking to make my first investment within the next few months.

Hi, i am pre-approved for a 50k credit line from a local bank, if i just apply it and and not using it, would it affect my DTI ration for purchasing a home in couple months? thanks