All Forum Posts by: David Dye

Welcome @Stephanie Han!

There is so much information on this site that it is hard not to learn something every time you log in.  Please let me know if you have any questions regarding financing.  Would be happy to toss in my two cents!

Cheers!
David

@William Huston

I use sideline. It works GREAT!

@Carlos Vega

Cabri hit the nail on the head in terms of seller financing. 

Unfortunately, FHA is a program which has guidelines that are extremely strict in most cases. The number of units is one of those things. Over four units you would need to start looking at commercial financing. Those loans focus on the income of the property over your personal income, however, they almost all require 20-30% down. With investments, banks have to see much more skin in the game to justify the risk, especially commercial.

Hope this helps!

Hey @Carlos Vega!

Welcome to BP!

The property you are in would need a commercial loan. If it were a four-plex, you could try to qualify for FHA (or conventional) using the rental income and have a low down. However, you are going to need at least 20% down to purchase the property because of the number of units. Have you tried asking the owner for an owner financing deal? If not, based on your low down and income, I would suggest looking into another property that is 3-4 units.

Hope this helps!

@John K.

First off, welcome to BP!

You seem to be in a very good position to grow! If I were you, I would use the money in the bank to buy another (leverage the heck out of this next deal because you have a relatively low LTV on these two). Then I would refi out the other two for lower monthly payments. The additional cash flow is a nice safety net.

There are two times I suggest people refinance their mortgages.  The first is so that they can leverage themselves by taking the equity out to buy more and the second is to increase cash flow.  You mentioned that you do not need the cash to buy another so the only reason you might refi would be to get a better cash flow.  Additionally, the rent on the condo is not where it needs to be to justify the payment on the cash out.

I was looking at the numbers that you posted and putting them into the calculator.  Am I correct to assume that you have refinanced already at least once?

Hey @Jeremy Brown,

The requirement for a full foreclosure is 7 years without extenuating circumstances for a conventional loan (you can't use FHA on the rental, unfortunately).

If it was a pre-foreclosure, the waiting period is only 2 years.

@Jill Rio

For commercial loans, we use a DCR of 1.25. If the property is only generating enough income to qualify for a loan at 50% LTV, that could be true... But as far as the highest you can go, the generally accepted number is 75% LTV for a purchase.

Hope this helps!

Hey Ryan, 

Great to see another investor from the LA area. If you have, at minimum, 15% to put down on a property, you can look into a rental property. As long as 75% of the rental income covers the mortgage payment (PITI), you are good. I invest out in the AV area as it is cheaper and cash flow is better than here in the main county. It's not too far either... Just about an hour drive.

Hope this helps!  

David

Thanks for the help guys! @Stephen Akindona @Alex Craig @Douglas Skipworth @Derrick Craig

The too good to be true part is what gets me every time.  I'm generally a strong advocate of staying in state but I want to get my feet wet in something out of state. Being from CA, all out of state cash flows seem too good to be true for me (compared to my current rentals) Haha. I plan on flying out to see properties before buying anything. Any suggestions as to what to look for? I assume there are things I should be on the eye out for that may not be something I would look for here in CA. 

What are some issues you thing I may run into with properties in a rougher area like the ones I mentioned? All tenants are section 8 and they are all currently occupied. 

-David

Hey guys, 

I was looking at a few SFR properties in the zip codes of 38108, 38105, and 38111. They are all rented for about $700 and are being offered at about $25k each with deferred maintenance/minor rehab. Does anyone know if these are good areas or of this is normal for the area? Any help would be greatly appreciated!

Thanks in advance!
-David