All Forum Posts by: Josane Cumandala

The owner may be offering to carry back financing because he knows conventional banks won't lend on it due to deferred maintenance issues. Perhaps a deal already fell apart over this and the owner's getting desperate. Due diligence will be key there. Line up your own title insurance, your own third party appraisal and home inspection. Be extra careful investigating any environmental or structural issues that could be expensive to remediate. Best of luck!

Originally posted by @Nicholas Aiola:

@Josane Cumandala You can certainly deduct seller-financed interest!

 Nice! Thanks Nicholas. Look forward to seeing you at the next NYC BP meetup. Always enjoy your insights. :) 

I have a question that's been nagging at me for a while. The answer to this may or may not have changed with the recent tax overhaul so it's totally okay if the answer is up in the air right now. 

I hear a lot about people putting deals together "creatively," i.e the seller carrying back the financing for a period of time rather than getting a traditional mortgage. My question is if I were to give the seller of a piece of property a note and make payments directly to them is that considered tax deductible mortgage interest, or would that apply only if I were to pay with a conventional loan? 

Thanks for this great thread and sorry if this question has been asked before. :) 

Hey Miesrah! 

Yeah unfortunately whether you wholesale or buy a property you will need some startup capital. As a young person I'm using the time required of me to save the downpayment to educate myself and analyze deals. Invest in your education first. Three days is not enough to be great at anything real estate or otherwise. 

My advice? Get your finances in order. If you have a job make a habit of setting aside a portion of your income towards your goal of investing in real estate. Use the wealth of information available here for free and in real estate books and podcasts to get educated. There are no free lunches or get-rich quick schemes. Anyone promising you guaranteed cash out the gate is probably scamming you. Be very careful screening potential mentors and partners and get your mind and finances right before taking the next step. 

This is a fantastic thread and I'm following mostly for my own education but in my experience as residential appraiser in NYC I almost never see owner-occupants putting 20% on property in Manhattan or Brooklyn. It's almost always 10% down, 90% financed - which is still a lot of money because it's such expensive real estate.  However I'm not sure if this is because of the specific banks we work with or if 90% loans are just more common out here. We are very particular about what banks we work for and do not like dealing with AMCs. 

Anyway, my point is this you may want to search for the best mortgage broker you can find who can find the right lender for you. Lenders that will be keeping the loan on their balance sheet rather than selling it to Fannie and Freddie may be able to give you better terms or some kind of downpayment assistance. Credit unions also almost always have better services and rates. You'll probably have to talk to a lot of people and kiss a lot of frogs before you find a prince. 

The terms a bank will offer will vary on any loan product. I'm not an expert on FHA loans but I'm not aware of any laws related to that agency being changed. It may be that the FHA itself is revising its own policies which I'm pretty sure it can do without legislation from Congress so long as their policy doesn't conflict with some existing federal law. It may also be that local banks would rather not deal with the onerous regulations of an FHA loan and instead are steering you towards other products.

I'm following this thread because I'm curious about this topic as well and would love input from someone more knowledgable about FHA loans. Best of luck Andre!

Originally posted by @Dru Enser:

@Josane Cumandala. Wow that’s nice you don’t know me and your telling me I’m attached to a home.

 I did not say that. I said you're emotionally attached to the deal. :) 

You don't. 

If the seller's attachment to their home exceeds their desire to make money on it at this time then no sale is going to happen. Think about it. If they are truly in love with it, are enjoying their life in that home, and intend to die there then no amount of money is going to separate them from that house. 

Now, if there is some extenuating circumstance that can only be rectified by selling the property, then you might be able to strike a win-win deal. If not move on. The one emotionally attached to the deal is you, not the seller. 

Sounds like you should hire a professional bookkeeper to manage your financials on the day-to-day or month-to-month basis and have him or her report those earnings to a good CPA who is knowledgable about real estate. Don't do yourself in by doing it yourself. If your time is better spent elsewhere whether it be managing your properties, finding new deals, etc. then don't get bogged down with using inefficient book keeping software. 

Meh. With interest rates artificially low demand for real estate rises and with more people getting priced out of single families more of them opt for small multi-families. 

When interest rates increase demand eventually declines, but we're still in the fear of missing out stage. Fundamentally though the price increases are driven largely by inventory shortage, not risky mortgage lending practices so there's no reason to expect that the next credit crisis will stem from the housing market though it will no doubt be affected.