All Forum Posts by: Clayton Silva

Hey Robert, you can absolutely refinance this with a conventional mortgage assuming you qualify based on your income for the property.  If not, there are still other ways to do that!  What state is the property located in?

My personal opinion, would you rather buy when prices are high and rates are low? Or buy when prices are low and rates are high?  Keep in mind you can always refinance and get a lower rate, but you can't get a lower purchase price once you buy!  

I feel like this question doesn't do itself justice.  In regards to a crash, it is always possible, however defining terms is super important.  Is a crash a 10% decline in seller's asking prices?  Is a crash a nationwide drop by 30+% in YoY sales price?  Is a crash a local drop in big cities but massive appreciation in suburban and rural areas?  What do we define as a crash?  Nationally, massive crashes/corrections in the housing market have only ever really occurred 3 times: Great depression, Inflationary period in late 70's early 80's (which was actually pretty minor considering rates were in the mid teens) and 2008-2010 which we all remember.  This is neither a common nor normal occurrence and does not happen often throughout US history.  A correction is more likely, however when home price appreciation is averaged over a 50 year period we are basically right at where they would have been had 2008 never happened (we've been playing catch up for 10 years so it feels like more rapid appreciation than normal).  Basic econ has people stuck in their homes from historically low rates and not wanting to downsize their homes because they qualify for less on top of an already national shortage in housing.  I'm not the smartest, but I do think it is likely that some markets will see some correction and others will continue to chug along as (maybe more slowly) as demand continues to outpace supply.  Just my personal thoughts!

 You can still qualify for a conventional loan as low as 5% down if you buy a single family!  There are actually a lot of options and you will be able to use the rent of the departing unit to help you qualify for more purchasing power than you may think.  

I am still seeing really good deals that make sense with conservative estimates on rate, capex, and property management in places like GA, NC, FL (watch out for insurance), and other states in the south and midwest. One of the tickets to getting a good deal right now lies heavily in your realtor's ability to negotiate. With rates as high as they are, people are feeling a squeeze in the margins, but this can be alleviated with seller credits. Seller credits can be used towards closing costs, including the points (to buy the rate down). In the non - QM space (DSCR loans, etc) there is less regulation regarding how much can be spent on buying the rate down. We have seen some of our clients buy a 7% down to a 6% with seller credits which allows them to make more sense of a deal. You can also try interest only options to lower the monthly payment until rates normalize and potentially come back down below 4 or 5%. This allows someone to buy a decent deal now, that makes a little bit of cash flow, but one that will be an incredible investment in 2-3 years when the pressure at the federal level reverses and you refinance from a 6% or 7% down to a 4%.

Other options are looking for ways to boost income like short term/mid term rentals, corporate housing, rent by the room, etc. or just putting more down and having a lower loan balance for a few years.  I have the privilege of lending in almost all 50 states with a lot of investors so we get to see a birds eye view of how people are making deals work in this environment!  

How do you currently plan on paying the down payment and closing costs? EMD comes out of those costs once the property closes.

@Paul Eddy would be happy to help walk you through some financing options. Our lending team is in almost all 50 states and we have access to some really cool non QM lending products. Feel free to dm me here

Personally, I think understanding makes the biggest difference.  Take time to find out why your spouse/significant other is hesitant/reluctant.  What are there goals?  What does money represent to them (freedom, security, power, time etc.) and how does that impact their thoughts on real estate investing?  What does their ideal life look like in a few years and could real estate even play a part in that?  

These kinds of important financial decisions require a ton of nurture, thought and consideration by all those involved and can be hard for some people to embrace or even talk about.  Another thing to consider is switching up your investing strategy.  I had a couple rentals coming into my marriage and my wife was fairly indifferent about them but she loves to host people so we have begun looking into AirBnB and short term rentals and she has gotten a lot more excited about the prospect.  It all comes down to understanding each other and being candid about goals professionally, personally, and financially.  Curious to see what other people think!

Investment Info:

Single-family residence buy & hold investment in Fayetteville.

Purchase price: $150,000

Interesting Purchase Opportunity. I was lucky enough to have a family member sponsor this purchase essentially. They gave me $150,000 cash to buy the property and allowed me to borrow that money for 18 months with no interest or payments!! This gives me 18 months of collecting rent to save for a down payment once I do a cash out refinance at the end of the term and give back the $150,000. This is essentially going to be a free house and, on top of that, I am now a licensed loan officer and can do the refinance myself to collect a commission on the back end of the refinance making it a steal of deal!

Investment Info:

Single-family residence buy & hold investment in Fayetteville.

Purchase price: $120,000
Cash invested: $1

3 bed 2 bath with about .5 acre lot. Beautiful backyard that backs into a government owned forest. Trails and forest behind the house, brand new gutters, 2 year old water heater, 3 year old A/C. 2 car garage with large, built in work bench. Recently remodeled floors and beautiful stainless steel appliances.

UPDATE: Refinanced in February 2021 and now instead of 4.1% interest, it has a 2.25% rate! I added an extra $175/month in cash flow with very little cost (I think it was like $2,200 for the refi). Going to have to put a new roof here soon :(

UPDATE: New Roof Hurt --> got a quote in 2019 for a roof at about $7,500 and just had this one installed in 2021 for around $14,000 due to shortages! Lesson: don't wait people! Especially in a place like NC where hurricanes and lots of rain can do a lot of damage to a roof in one year. I was lucky the old roof didn't break down!