All Forum Posts by: Jenning Y.

I think @Chris Seveney made a good point.

One reason is just like what Chris mentioned: Load Modification Increased.  

The second reason is some lenders chose to sell these distressed loans off-market instead of foreclosing these properties and then sell them to the public.  Of course, buying these loans need cash, most of the buyers are large institutions.

As an investor with rental properties in several states and having been living in Houston Metro for almost three decades, I can understand the OP's frustration.  

Comparing with other markets, Houston really is not a good rental market. And the only property that I want to get rid of is the one in Houston. High property tax, high maintenance costs due to weather (AC running almost full year, hot and high humidity), high vacancy rate, high PM fees( first month rent as commission is a must, while other markets do not have first month commission at all), all makes Houston is a so-so market for rental business.

Having said that, if that were me, I probably will get rid of half of bad ones and have a PM managing the rest of the half.

Arbitrage with Life Insurance:

 Let's assume we have $100, we can invest it directly in S&P for 10% Annual Return, or we can invest it in life insurance, which will have only $85 cash value left. Then we borrow against the cash value and invest in the same product such as S&P. 

Now we look at two cases with rate spread 1%, and 2%:

1) for 1% rate spread, the break-even point is the 18th year

2) for 2% rate spread, the break-even point is the 9th year

Initially a Life Insurance doubter myself, after looking at those numbers, I realized it works for some people.  Though it does not work for me, but the concept is still valid.

@Andrew Michaud   The numbers look too good (to be true?).  If the numbers are real and legitimate, it sounds like a good deal.  

At the peak (first quarter of this year) of the market, the national muti-family cap rate is close to 4.4%, though the recent interest rate rise pushed up the cap rate (which pushed the price down), your numbers still look far far better, the property's cap rate should be more than: 110k/1.33m = 8.5%.

However, even if the numbers are real, they can easily be manipulated. For example. if each year's average repair/capital cost is $50k, the seller can easily move all of the major repairs to the previous year to make this year's number look much better.

Also, $35k per door, the property probably is located in a rough area and tough to manage. 

So due diligence, due diligence, due diligence. If you can verify all the numbers and you can handle tough tenants, it is doable.

Do not buy in Houston,  unless you know  hurricane zone and flood zone well. In fact, you should not buy in Texas at all,  property tax is too high. Try other lower property tax states.   I am living in Houston metro for more than 20 years. If you must buy in Texas, try Dallas or Austin.

1) If your main purpose is to want to know the ACTUAL value of the property, then it is ok to hold off the purchase and rehab info.

2) However, if you want to get higher appraisal value ( in most case of cashout refinance), then it is much better to tell them the prices and also the number that you are hoping for, in most cases they will give you the number that you want.

For compact list,  we do not need these:

I have a dozen of condos for which HOA master policy covers the basic structures, betterments, and fixtures. Currently I have HO6 costing about $140~200 for each unit, on top of that I have a personal umbrella. I am thinking about replacing the HO6 with premise liability only policy, on top of that add a commercial umbrella. From liability protection perspective, I should achieve the same liability protection, right?

I know without HO6, I will lose some coverages like personal property, loss of rent, etc. But by saving about $2000 per year on insurance, I can self-insure the other coverages.

What do you think? Thanks in advance.

 Banks DO lend money "out of thin air". If a bank received $1B total deposits from customers, they will lend out far more than that - that's the basic concept of fractional reserve banking system,   a concept used by almost all modern banks.