All Forum Posts by: Fyzl Atmar

Russell Hargrove I hope this helps. Just to get the numbers straight please correct me if wrong...80/20 loan on 355k meaning your primary loan was for 284k at 8% (174k amortizing and 110k balloon at end of 40yr term) and the second was for 71k at 8.5% on a 7 year term. From my calculations P&I on your primary is $1209.84 (calculated from 174k not including balloon) and after 10 years you owe 265k. P&I on your second is $1124.39 from my calculations, I'm unsure how it's $1650 unless your counting $525 for escrows including taxes & insurance in which case it makes sense as $1650 + $1209 = $2859 which is about what you pay monthly. If you've paid on the second for about a year then then the remaining amount is about $63,244. Your total owed on the property is approximately $328,244 and if appraised at $295k puts you at 111% LTV. A couple of questions, is your current primary a conventional? Private note? I'm asking to find out to see if your primary is Fannie and Freddie Mac eligible? You can check it on their site to see if it is. In the case that it is a HARP loan would be your best bet as their is no LTV maximums and they qualify for investment properties as well. If eligible your proposed new loan would look something like this... Principal: $328,244 Rate: 5% (average based on conventional HARP on investment but subject to credit) Term: 30years P&I: $1762.08 PITI: $2287.08 (using the $525 for tax&insurance) It all depends on your primary and it's loan Eligibility. There might be some other options you can look at as well in the case that it's not Fannie and Freddie eligible. Feel free to message me if you have any questions. Happy investing, hope this helps!

Spencer Brett good luck my man! Happy investing!

@Spencer Brett your scenario seems pretty straightforward. The best way to figure your max loan amount would be to start with finding out your Front End Ratio and Back End Ratio DTI (debt to income), this will let you reverse engineer your maximum loan amount while following the front/back-end ratio guidelines of 28% and 36% respectively (you can go higher, but the higher you go the more difficult to qualify but not impossible up to a certain point). Front end is calculated by your proposed mortgage payment / monthly gross income & back end is calculated proposed mortgage payment plus all other monthly payment obligations on your credit report / monthly gross income. Use a mortgage calculator to calculate the maximum loan amount that will give you a monthly payment that when plugged into the ratios will come back within the 28%/36% front/back end guidelines. This is a rough estimate but relatively close. If you use "X" for the monthly payment and solve the above formula for the front and back end ratios for "X" then you can find out your maximum monthly payment and from there easily calculate backwards your full qualifying loan amount. I would solve it for you but I have a couple of questions in regards to the student loan. Are you in forbearance? Deferment? Or currently paying a monthly debt?

Will this property be your primary residence or investment property?

Kyle Weckman in the above example of owing 300k on a 400k property would put you at a 75% LTV (loan to value ratio, in essence how much of a percentage of the loan the lender owns). Your mortgage expense would be the addition of all notes attached as liens to the property, in a scenario with a first and a second (HELOC) that would be the sum of your payments. For both conventional or FHA you can take up to 80% on a primary residence, in your scenario the max you can take out in cash would be 20k to bring your to a 80% LTV. For a VA loan you can go up to 100% LTV and in that instance you can pull the full 100k. Unfortunately on a second home or investment property the 75% is the max cash out for conventional & FHA. Their is no VA for second home or investment property. I hope this helps! Feel free to give me a call if you have any questions always happy to run through scenarios!

Kyle Weckman great question! You have multiple options when it comes to getting cash out. One method like you mentioned is a second or HELOC on a property. This allows you to tap into funds without changing your primary mortgage and is one option. The other and better option in my opinion is doing either a conventional cash out, FHA cash out, or if your a veteran a VA Cash out refinance. If it's your primary residence SFR your able to pull cash up to 80% LTV on a conventional or FHA but up to 100% LTV on a VA loan. If it's a SFR but a second home/investment property and not your primary residence your max cash out on a conventional or FHA is 75%. VA does not do second home/investment property. Additionally if it's a multi-family as your primary residence max cash out is 75% on conventional & FHA and 100% on VA. Multi-family for a second home/investment property has a max cash out of 70% on conventional & FHA. In my opinion it would be best to do an analysis of your properties and find out where the most opportunity is for equity while following the guidelines above and seeing if you qualify with credit requirements and DTI to pull cash out from that single property. After which you can rinse and repeat the process with your following properties in a timely manner which can range from 1 to 6 months after the last transaction depending upon your credit and income strength. Every scenario is different and sometimes a HELOC could be a faster and quicker alternative while other times refinancing into a new mortgage might be the better option. Feel free to reach out and I would be happy to look over the scenario for you my man! Your heads in the right place though, utilizing stagnant equity for down payment into new properties. Best of luck!

@Kevin Theis in regards to the FHA 203k rehab loan you were correct to say the home can't currently be in a livable condition. This is true for the Original FHA 203k rehab loan BUT not true for the FHA 203k STREAMLINE also know as the Limited 203k Mortgage. This will finance up to and above the value of the home with a limit of $35,000. Check out the HUD page for this program at...

https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k

Their are some other loan products that also come to mind as well that might work out but I would need some more info like the county and zip your looking at. Feel free to message me if you have any questions! Best of Luck!

@Nicholas Baughman investing in San Diego can be difficult to structure into a business plan primarily because the average property price is relatively high compared to the US market as a whole. But that shouldn't discourage you, I was born in San Diego and have lived here all my life watching the market go up and down over time in all regions. There is definitely room for your business to grow. The two best methods that come to mind in this market are...

- 1st Method: Focus on BRRRR on properties East of the 125 highway in regions such as Spring Valley, El Cajon, & La Mesa as these are moderately well priced in the SD area, have room for market growth (&loss, be cautious) as these inland regions fluctuate more than the coastal SD regions, and finally the amount of Duplexes & multi-family homes are more prevalent in these areas of SD.

- 2nd Method: Riskier and heavily focused on Marketing to Condo Owners for Condo flips in Downtown San Diego. It is arduous effort to get the deals but if you do you can have a quick realization of profit returns as long as your holding periods are less than a couple months. This is only possible if you purchase at a below market value or from distressed sellers. BRRRR is impossible with Downtown SD Condos due to high HOA's but the demand is high for the condos nonetheless. If purchased below market value the inventory can be moved quickly without much extra outflow for rehab costs. This is still risky and only possible if you have focused a majority of your efforts in finding the deals.

I have not included beach front properties since I personally believe the holding costs could far exceed expectations and would not be a smart choice for any new venture. 

Best of Luck!!

@Jason Maestas you would be able to use that income in certain instances. More than likely your lender was being lazy and did not want to look at the whole picture. Capital gains are generally not considered income because of the nature of it being a one time transaction. But that doesn't mean you can't use that income if you need to rely on it for financing with these stipulations..

If you have any questions reach out my man!

Straight from the Fannie Mae Selling Guide - Verifying Capital Gains Income
Document a two-year history of capital gains income by obtaining copies of the borrower’s signed federal income tax returns for the most recent two years, including IRS Form 1040, Schedule D.
Develop an average income from the last two years (according to the Variable Income section of B3-3.1-01, General Income Information), and use the averaged amount as part of the borrower’s qualifying income as long as the borrower provides current evidence that he or she owns additional property or assets that can be sold if extra income is needed to make future mortgage loan payments.Note: Capital losses identified on IRS Form 1040, Schedule D, do not have to be considered when calculating income or liabilities, even if the losses are recurring.Due to the nature of this income, current receipt of the income is not required to comply with the Allowable Age of Credit Documents policy. However, documentation of the asset ownership must be in compliance with the Allowable Age of Credit Documents policy (see B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns, for additional information).

Oliver Fang some great info has been shared in this post. I was born in La Mesa, a nice suburb in east county. If your looking for a good place to invest I would recommend starting your search in El Cajon, Lakeside, and farther out east minus the Rancho San Diego & Dehesa areas where the properties become extravagant. The price points here are some of the lowest in San Diego. It's not a sexy place to invest but you have a solid community and consistent availability of renters. Their are 4 high schools in the area so you have long staying family tenants. Some investment gems to look out for are SFR in multi-family zoning that you can later develop into more units, dilapidated properties (drive down E Main St. in El Cajon and run a route through the neighborhoods following that street), and while your out in El Cajon check out the foreclosure auction at the courthouse, I believe if you go to the third floor business office you will be able to check out upcoming properties. Good luck in investing brother!