All Forum Posts by: Edward Liu

Use accounting software such as QuickBooks.  Your mortgage payment will be split into interest (expense) and principle (not income, but reduces long term liability).  So your overall fix asset will increase with each mortgage payment.   There is no need for you to calculate, the software will have reports show your monthly and yearly P&L.

Most large banks don't allow you to transfer title to LLC for conventional loan - it will trigger forced pay off for the whole loan. Call the bank directly and ask.

Make sure to get enough liability insurance no matter if held in LLC or not.

For foundational issues, ask engineer what do you need to do immediately, in 1-3 years, in 3+ years, etc.  You will get a picture on what can be delayed.

You might be able to sue for the money paid to the realtor.  Ask for refund and if refused, contact NC real estate commission.  This seems borderline fraud that realtor took the money before deal is done.  

For future deals, only pay security deposit, inspection, appraisal, and engineer cost up front.  Anyone else who ask you pre-pay is likely fooling you.

Another advice is never hurry into any deal due to some artificial deadline - such as lease is up.  Even lease is up, ask to sign for 3 months extension, likely landlord will agree.  They are not going to evict you if you are good paying tenant.

Proceed with close - let bank do whatever to move toward close, so you can still meet the close date.  By proceeding, does not mean you have to sign the final close papers on May 9 if you find major issues with foundation before then.  The worse case is you lose $11k (your cost of walking away now) + $500 engineer cost.  

Foundation issues can be big or small.   We can not advise unless knowing the real issues.  You should be able to schedule structure engineer (call many and see who can do the earliest next week).  Durham is a large enough city that there should be plenty of engineering firms.

You should still hire engineer (~$500) to evaluate and estimate cost/time frame to fix.  Usually this evaluation can be done within 2 weeks if you act soon.  

You should still proceed with close while waiting for the engineering report.  

Never believe what seller states.  

With building that sells for $12k for 10 units, likely need gut rehab.  You should get your own inspectors/contractors to estimate.  What about HVAC systems, water heater, roof, siding, electric, windows, etc.?  I assume 90k is for rehab interior of the units.

The location of the building is likely not good.  Is it in warzone?  

If the location is C, make offer to lock up the property (that you can easily walk away with minimal loss) and then get contractors to estimate. 

Don't pay more than appraisal no matter how much you are in love with the deal.  Re-negotiate with the seller and ask to lower price.  Normally there is appraisal contingency in contracts anyway.

If you can not get the price to be lower than appraisal, suggestion is to walk away from the deal.  Just think about the next person who will buy from you - they will ask for appraisal also.  You can never sell.

By walking away, you would only lose the inspection cost plus appraisal cost, deposit should be returned because financing is not met. 

If price are similar, as investor, I would pick the best high school - as it affects college admission.  In where I live, people literally move to specific top school district for 4-6 years so kids can get the best high school education.  After kids leave, they would again move to some place cheaper.

If the house is for yourself and you only have very young kids (high school is 3-5+ year away), then suggestion is focus on school of immediate need.  For investors on this forum, it would not be a stretch to upgrade/move to better home in 5-8 years. 

I use www.realtor.com where in map view, it has a filter for school and crime. 

During last downtown, medium bay area housing prices in a number of cities did drop 40%-70%, but recovered very fast after 2014.  I live in Palo Alto, one of more expensive areas in the bay area.  Between 2008-2010, medium prices in many parts of Palo Alto dropped by 40-50%.  You could have brought an 1+ acre Palo Alto Hills mansion for $1.7M in 2010 (one of my friends brought one in 2010) and some of those properties sat on the market for 6+ months.  In 2008, those homes cost $3-$4M.

Despite all the IPOs, in the end it is still supply and demand.  There are less and less people who can afford the bay area prices, so long term appreciation will be lower.  I know a professor/doctor in Stanford University Medical school who earns nearly $500k per year - the house he brought/can afford is a 2 bedroom 1200 SqFt with 6000 ft lot that costed $2.2M.  His family of 4 is squeezing into this $2.2M 'starter' home in Palo Alto.

In the bay area, the market for $3M+ homes has clearly softened.  Homes between $1.6-$2.5M has a ceiling of $2.5M-$3M as someone who can afford $3M+ homes will never buy these small homes that cost a fortune.  Only thing that still has leg is condo/townhouses around $1M - still affordable for dual income tech industry working families.  However, these will likely have biggest price depreciation during downtown.