All Forum Posts by: Franco Li

One of the problems that you'll notice after buying several houses is that lenders require to you save more and more as reserves for each mortgage. Typically 6 months of reserve, but as you can guess, this becomes multiplied by how many mortgages you have. So that's where creative financing really helps! Best of luck!

I actually worked at a startup student loan originator and at a buyer of pools of student loans, so I can give you some insight from both perspectives. As an originator, you really don't care about the individual since you recycle the loan into an ABS at some point or sell it off in a pool. As a buyer, I don't think you can get into the space as an individual since it would effectively be buying full consumer credit without any collateral - i.e. you are a credit card provider. If you do want the exposure, there are some funds out there and ETFs that buy ABS backed by these student loan pools. Also on the consumer credit point, if you want to get that exposure you might want to just get into Lending Club.

Is that like a turnkey?

Local banks and credit unions would be my first go-to. Avoid large national banks as they have excessive demands and review processes. I never go to a mortgage broker, but I'm sure one of them on here will guide you in that area! Personally, again local banks and credit unions are my first target. 

Welcome! Waiting 2 years is a ton of opportunity cost, and although waiting might save you $$ on the % interest, time-value and the potential for double-digits ROI makes more sense in my opinion to just go for it! House hacking as a first step is a fantastic idea, as you will not only accumulate equity but also save and target your next property. If you are a loan officer, you should already know the creative financings available but provided that you might not have the credit criterion currently, you'll have to think of interesting ways to forge ahead. No shame in saving up now for a downpayment, then house hack and then do some RE strategies for your portfolio!

All,

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1200 HOA fees are incredibly steep, not including a mortgage, insurance, taxes, don't you think?

When you say that you can only occupy it 26 weeks/year, its effectively a timeshare right? If so, people have rented out timeshares before as investments so it would make sense - and w/ the rise of Airbnb, this might actually work. I would check the bylaws of subletting/renting it out. I would also triple check then numbers bc the HOA fees are a bit high

@Andrew M.

I agree that certain areas are overheated, but I feel like that comes with the overall economy getting better - i.e. more people flush with cash, low unemployment rate, more opportunities for people to buy homes. The price of a home these days is fractional to metropolitan salaries, so I think housing prices going up is inevitable. I will point out that I do think a market correction is inevitable. 

Think about this, rather than understanding your risks of real estate, lets look at opportunity costs:

1.) Leaving the money in the bank

100% safe, FDIC will cover you, and you'd be earning roughly 0.01% APR - although GS Bank which I use is offering 1.00%

2.) Putting your money in stocks or bonds 

Assuming you don't want to spend time looking up and analyzing different companies and various investment grade or junk bonds, and you put the money into an index fund or a mutual fund. You will be making roughly 5-10%/ year and face just as much risk from the market and economy. On bonds, you'll be making maybe 1-5% on short duration investment grade, and maybe 8%+ on high yield junk bonds. You will also leave your capital gains to be taxed which you cannot offset with expenses. 

3.) REAL ESTATE

Real estate is more of a business than an investment. You have to manage the inflow and outflow of your investment, the actual property, and you do a lot more work. Your earning potential will vary, but if you are competent and intelligent then you can perform anywhere between 10-50% ROI. If the market goes bust, hey dude, you at least still own a property that can still house someone (even at lower rents). When you want to leave the market, yes you may face residual risk on the value but that comes with being an intelligent investor in the first place!

Also, if you are scared about a housing market downturn, check out my view on that:

https://www.biggerpockets.com/forums/48/topics/430...

That is market, and I'm not sure where you would find something less. Perhaps if there rental rates were higher in that area, you can argue for a lower % so the notional is average.