All Forum Posts by: Yinan Q.

 I talked to my loan officer on this subject and here is what I learnt. 

Disclaimer: I am not a loan officer or mortgage broker. The underwriting guidelines can change anytime, anyway. Always consult a professional if you need help.

For cash purchases, there are two ways to get your cash out using conventional loan (those sold to Fannie). Delayed financing and cash out refinance.

The major difference is how soon you can get your cash out. Theoretically you can do a delayed financing the next day after closing with cash. You will have to wait for 6 months before you can do a cash out refinance. 

The LTV depends on the total number of loans under your name. You can get up to 75% LTV on investment properties if you have less than 4 loans, including your primary residence. 70% LTV for 5 to 10 loans. More than 10 loans you are out of luck with conventional financing.

The amount of cash out for delayed financing is also limited to the total cost for purchase, closing, and rehab. You will also need proof showing fund used for the purchase is your money (two months of bank statement).

Interest rate wise there is no difference between delayed financing and cash out refi.

@Natalie Kolodij, thanks for the info. This definitely helps me and other investors.

Awesome numbers! 

Quick update...

We closed on Friday. The contractor started working the same day. Roof, gutter, siding all cleaned. The previous owner left a about 5 yard of gravel on the driveway that has been sitting there for several months. 

The neighbors are thankful about what we are doing. 

CAPEX stands for capital expenditure. Basically it's the cost for replacing large ticket items such as roof, siding, furnace, AC, etc. Items that you will have to replace eventually no matter how well you maintain them.

I thought I'd share this video with you.

So the other day I made a yard sign that I am planning to use at the house I am buying. My 3 years old son got very curious about it...

Congratulations! Look like a great deal!

@Wesley Wong, thank you for your comments. One of my goals of sharing this is that new people can learn from what am doing - right or wrong. i am glad that you find it helpful.

@John D., I did include tax, insurance, repair and CAPEX in the cost but not PM.

Tax abut 3k/yr, insurance $550/yr, 3k/yr for repair and CAPEX. Insurance is low in my area. You are correct, it will be negative $125 per month with PM.

I agree with you not to use past performance to predict future. Based on the population growth, job growth, and housing inventory data I have, I believe the market performance of the past two year are a true reflection of the fundamentals - population increase, job growth, and lower inventory. 

4.0 Contractors

This house doesn’t need a lot work to make it ready to rent. It needs new interior paint, a new garage door, new floor in the kitchen, miscellaneous small fixed here and there, and a good cleaning throughout. I also want to replace all interior doors since the existing ones are old dark wood veneer type and many of them have holes in them. My estimate of the fix up cost is approximately 14k.

I started calling contractors during the holidays to get bids. Since I have not closed on the house, I did ask for permissions from the wholesaler and the seller to show the house to the contractors. I called about ten contractors eight of which said they will look at the project. For the two that are not interested, one told me they only take customers who are home owners not investors. The other one does only painting and do not want to take any other work.

Five of the eight interested showed up during my open house. The other three looked at the house in the following days. It is interesting to have many contractors looking the same project at the same time. One of them told me afterwards that he won’t be sending a bid because he does not want to compete with other guys. Another guy told me that he will be too busy and cannot finish the work before the date I wanted. I like what the second guy said better than the first one’s.

So far I got four bids and am expecting another one the a day or two. Three of the four bids are about 10% higher than my estimation but are within 5% of each other. All three of them have pretty good reviews on works they’ve done before similar to my project. They all are pretty good at communication and are easy to talk to. I think I won’t go wrong with any of them. The other bid is significantly lower than these three. I have disqualified him the day I met him - he was the only one that had no idea about the project (I emailed the punch list to every contractor before the open house), and didn’t have a piece of paper and a pen with him.