All Forum Posts by: Kevin Purvis

I'm interested in the area and working on getting entitlements within city limits to some lots. If you set anything up, include me!

I don't think she will have an issue with a construction loan for owner-occupied home - most banks offer that.  Could be an issue if she has zero income, though.

If rural, she might be able to qualify for USDA loans.

Where are you buying from (which retailer)?  Typically they have a list of people they can recommend and then you can compare.  Or at least that's how it goes in California.  

Have mostly stick built homes.  

Dropped our first modular home last month (came in two pieces) in California and have to disagree with the notion they are flimsier.  They are built the same.  The "tying together" process from a frame perspective is basically horizontal blocking, matching exterior trim and putting OSB down after on the floor. It is in the back yard of a 1915 craftsman home, stick built (redwood) home and you can't tell the difference, inside or out.

What is flimsier is manufactured homes (those homes are built to HUD standards and appraise differently). Those are considerably different than the California codes in many respects. Maybe flimsy isn't the word I would use (steel framing) but insulation and a lot of other elements are lower grade.

I really want to use modular more, but initially found it really hard to determine who is real and who is not.  The real ones will meet you in a couple days notice and bring you to a worksite, but are also much, much more than ~165/sq ft.  

If they really can deliver at that price point, then I think definitely worth looking in to, but definitely don't want to be a guinea pig.  I'd recommend re-engaging when they can bring you to a showroom/factory/site where work is being performed, and give you names of satisfied customers.

Can you break it into multiple phases?  If you could build the 1st 25% of the project and get cash running first it might change some minds.  If these are legitimate buildings and you can get CofOs they should be lendable. However, some lenders would want some seasoning (again, showing actual cash flow, etc.).  

Another thought - do you have any properties free and clear?  If so, private lenders an use those properties as well in their calcs.

I used PenFed for my last one and it was pretty simple. However, I will also note that when I was trying to refi another one of my homes, since the HELOC was not yet "seasoned" they assumed I would have to pay 1% of the total potential value of the HELOC per month, which almost put me in a worse rate bracket. They didn't season a normal mortgage I also did at the same time. So I would say be wary of using HELOCs at this moment if you plan on getting another loan anytime soon.

@Kelly McJunkin It might depend on your lender.  Some lenders are very strict and want to see two years of rental income to include it in your Debt to Income ratios, while others just want to see a 1 year signed lease.  

Another option you could go with, which is not for everyone, but is going with a private rental loan which is interest-only. Private lenders generally don't need a history of renting to count that lease (75% of it anyway) as income, and you can get ~5% paying only interest. These are usually only 5 or 10 years in term, but they also typically go up to 80% LTV, whereas most banks will only cash out to 75% LTV.

Ultimately you have to run the numbers yourself, I try to go conventional as much as possible because I like things to be locked down for 30 years. But I know people who swear by the interest-only payments as it lowers DTI, and the interest expense can be deductible (depending on your personal tax situation).
  

Hi Angus,

I wish I had started as early as you!  I would focus on finding opportunities.  For the right opportunity, there is always money.  You can start out by getting the finders' fee and networking with investors without spending any money.  Also, networking in general is a good idea.  

Pick what you are passionate about and try to figure out (or learn from someone else) how to spot opportunities.  For example, do you like the idea of flipping?  What about development?  Residential or commercial?  Why?

I would also advise that if the amount of zeroes is what you really want, focus on something that is specialized. 

I do think its a good idea to have some debt to offset inflation. depending on your location in Southern San Diego and how close it is to the ocean,. I would consider renting it out and keeping the debt in that house and then renting into Temecula until you know the area a little better.  Consider getting a 75% cash out on your San Diego home and using that money to either BR* in Temecula or invest in other opportunities.  

I do think that Temecula and Corona I probably the two best markets in the inland empire though, so if you find a place you like or a lot you really like and you want to build on I might go for it.  

I would be a little bit cautious of some of the lower priced areas surrounding Temecula.  Once the forbearance ends I think we will see where the rubber hits the road in places like Lake Elsinore etc. which have attractive pricing but generally speaking much worse demographics and census data than Temecula.