All Forum Posts by: Kenny Simpson

 @Rabekah Siatunuu there is deals happening everyday. Having the right team and guidance is what you need at this point. San Diego is great for value ADD, properties with under market rents, adding ADU's, STR and building equity. There are many sub markets in San Diego, some for cash flow, some great for equity plays and it really depends on your goals which option is best for you.

smart move, look for under rents, value add or ADD an ADU. Keep trading up is the name of the game.

A few years ago when the world shut down and every small business was running to their banks to get their PPP loan, customers soon realized their BIG bank was not really there to help and they were forced to look elsewhere. Many of them went to small local banks or an online channel to help with paperwork so they could get funding ASAP for their business. Small banks were winning over so many new customers and those customers moved over their deposits and started to bank with these small banks that came through when they needed help the most. Small banks were the HERO, and many customers realized the role they play and the level of service/attention that exists with small banks.

Now comes along this SVB drama, putting a lot of bad press and pain on the small banks. The fear and confusion is making some people pull all their money out and put it into the larger banks. The small banks are having to do damage control and bring confidence to their customers in a matter of days. On top of this ALL banks have pulled back in 2022 on lending due to market conditions and high rates that are slowing down lending demand.

When you drive around anywhere in the US and you see all those small business, small hotels, restaurants, start ups, etc. majority of the business or small real estate deals are done by small regional banks. Small banks are the bloodline to small business, local real estate deals, startups, agriculture, wineries, ma and pa local businesses and the list goes on and on. Big banks know the importance of these small banks and what purpose they serve to all these communities to thrive and get funding.

My wife and I have been doing commercial and real estate financing for about 20 years. Trust me when I say, if these small banks go away or even tighten up more, this is going to really have a NEGATIVE impact on local business and real estate transactions. We use small banks on so many transactions for our clients in California and without them lots of deals would not get done. It pains us to see this negative press and people fleeing to BIG banks. We need small banks like we need air and when customers freak out from bad press this is only making the situation worse.

It is important to support your local small banks that are there to help our local communities. They were there to support so many of us during the shutdown, on your new business venture, your tough real estate deal, your boutique hotel, your construction deal and the list goes on.

 Hi Brain, nice to meet you and welcome to the real estate game.  There are so many options and opinions out there, you are doing your homework and research which is very smart.  Talking to and getting tons of advice is great as well.  I would personally start in your backyard, do a deal or two and then go from there.  Books, conversations, podcast, advice is great, but at the end of the day when you actually buy a deal and go through the process that is really what matters.  That deal being close to home is much easier to manage and handle.  California is an amazing opportunity and I have amazing success here as an investor.  Once you do your first deal or two, your conversation, questions, confidence will change and it will be much easier to figure out where you go from there.  I personally stick to mainly San Diego where I live for many reason, I been in the game for almost 20 years and know a ton of investors locally and all over the country as well.  So I have really good data and real intel from them.  

Good luck and reach out if you want to connect

The recently released update extension not only delays the tax filing deadline to October 16, 2023, it could also extend your 1031 Exchange deadlines until October 16, 2023 as well!

For example: Typically, if you were to close your investment property on April 1st, you would have until May 16th to identify property and September 28th to close (45 and 180 days respectively). With this recent extension however, you will now have until October 16th to both identify AND close your Replacement Property.

This will allow for clients that are doing 1031 Exchanges to take more time to do the due diligence on properties that they intend to purchase and potentially take advantage of lower interest rates, if rates start to decrease later in the year. Instead of rushing to find suitable Replacement Properties that meet your needs, you will now have a lot more time to make one of the biggest financial decisions of your life.

As you can see, now is an INCREDIBLE time to list and sell your investment property and exchange into a better performing asset.

Fannie and Freddie are NOW going to require for 12 month seasoning to do a cash out refinance for even owner occupied properties starting in early 2023. I would NOT be shocked if other portfolio or NON-QM options follow these guidelines in the near future. Yes, there will be other options if you need a cash out refinance before the 12 months, terms/products/rates might NOT be as competitive. It seems they are really trying to slow down the market and keep money out of the system, cash out refinances were a BIG part of the refinances over the last few years. As the market changes for better/worse we will always see changes in lending, don’t be surprised as we move forward in the coming years lending guidelines to continue to change with the market conditions.

See below for exact guideline and what will be acceptable moving forward:

For all cash-out mortgages paying off a first lien mortgage, the following seasoning requirements must be met:

• The first lien mortgage being refinanced must be seasoned for at least 12 months (measured from the Note date of the mortgage being refinanced to the Note date of the cash-out refinance mortgage
• Original note date would be validated by the credit report or title commitment.

The seasoning requirement does not apply for the following cash-out refinance transactions:

• Loan proceeds to buy out the equity of a co-owner for an owner-occupied primary residence special purpose cash-out refinance transaction:
• When property has been jointly owned for 12 months prior to initial loan application; unless parties have inherited or was legally awarded the mortgage premises.
• Fully executed written agreement by borrower and co-owner stating terms of property transfer and disposition of refinance loan proceeds
• No cash back is permitted to the borrower retaining sole ownership of the property.
• Received an accept AUS decision and meets maximum LTV/CLTV for cash out refinance transactions.
• The first lien mortgage being refinanced is a Home Equity Line of Credit (HELOC)

If you have any questions, please reach out to us 😊

Hi Shannon I work with lots of RE agents that focus on RE investors and investors on the mortgage side.  We should connect :)

Hi Brian,

Are you working with an agent that specializes in 2 to 4 unit properties?  Not all deals are negative cash flow in San Diego or S. Cal.  There are plenty of deals that will cash flow and if stabilized they could cash flow within months or a year depending on what you are doing?

If you want to chat more about this let me know, I work with lots of investors on the mortgage side and I am one myself.  So I see a ton of deals all the time that are good buys these days and some great value add opportunities.  

lets chat :)

Yes, it will come back down.  The servicers know they are all going to refi so they have to build in that premium for now.  It will shift back with inflation and rates come back down, whenever that is.

I started to do research and thinking about what can have an impact on US home inventory. I noticed something that is NOT talked about that much and is NOT in the headline news. Median years we are staying in our home is at a ALL time high of 13 years, we are living longer and from age 50 and beyond we move a lot less than when we are in 40 and younger.

When you look at the charts below you can clearly see that we are NOT moving as much since the financial crises of 2008. We are living much longer and that will only increase due to all the new medical innovations that are out now and TONS more coming. When we get past 50 years old, we barley move. All these factors not helping getting new listings on the market and these data points will most likely keep having major impact on inventory moving forward. On top of ALL of this, a new study came out that the average rate on a home that has a Fannie/Freddie/FHA/VA is 3.8%, that also is NOT going to motivate people to sell and move.

Do you think us living longer, staying in our houses longer and low locked in rates is going to kill inventory for the foreseeable future?