All Forum Posts by: Josh P.

If you are willing to broaden your horizons to anywhere USA, then I would certainly do so.

For instance in Palm Springs, CA where I live, you can purchase multifamily properties for below replacement cost. I'm not sure what the demand for rentals is in the off season, though.

You will get benefit from an owner occupied situation in terms of lower interest, being able to bid on HUD+Fannie and not longer having to pay rent, but will these benefits offset the premium price you will be paying in your target area? Honestly, in your position, you could do both. And by both I mean get into an owner occupied multi unit, and invest in an area where the price per unit isn't so high, an area where you would actually have some monthly cash flow.

Just for kicks lets run some numbers on a specific listing I found on the Ventura county craigslist. ,

listed at 550k
income per unit 1,900
Monthly payment 3273.35 (5% 30 year fixed)

Thats with .7% property tax and doesn't count insurance.

So basically in a best case scenario, you would have to come up with 3273.35 per month plus insurance minus the
1,900 per month in rent.

Appreciation rates in Thousand Oaks over the last five years have been 5.25%, with an average annual rate of 1.05%.

Total appreciation in the last ten years has been 96.76%

Thats the reason, you're paying 550k for a duplex that would sell for replacement cost in my town. In my opinion, the price per unit in Ventura county still reflects the price increases brought about by last decade's real estate boom. I'm sure they have fallen somewhat since '08, but not enough to merit investing with a buy and hold strategy beyond your owner occupied unit.

If yo can find a multi unit in Oxnard that would actually cash flow and you don't mind the condition, location or commute then that would be even better. You would have a property that would be doing something for you beyond supplementing your new jumbo loan.

Last thing I'll say is this. I own a property in TX, a triplex I paid 55k for the property, exactly 10 percent of the asking price of the above example.

I did a cosmetic rehab for around 6k and rented out one unit as a furnished corporate rental.

I get rents of 2,200 per month. My mortgage, taxes and insurance on a 15 year note total around 760 a month. It is managed locally.

I don't have to worry about my property depreciating half its value. I don't have to worry about the economy taking a dive and people not being able to pay me rent that is sufficient to cover most if not all of my expenses.

You can't get those kinds of numbers in Ventura County where the prices are still crazy because of a few crazy years.

Wow Thanks!

A few more details. I will have had the property for exactly one year come Feb 28th.

The lender is a bank, but I don't think it was a Fannie/Freddie loan to begin with because I didn't buy it originally with it as my primary residence.

The situation now is my wife and I travel all over the country with our jobs. For tax purposes, one of the units in the building will be our tax home. When we are gone, we rent it as a furnished rental. We will live in it when we come back to our home town between jobs.

I would be up front with the lender about this and see if they will let me count it as my primary residence.

Her credit is 750+, mine is around 650.

If it could qualify as primary residence, could I pay for my own independent appraisal and show it to different lenders? I'm also wondering what entries are dis favorable on a tax return. I've already filed my taxes, so I hope we didn't have any :-(

I'm loyal to the best interest rate, and I would certainly be loyal to a fixed interest rate. If that's even possible.

I walked into equity on my first property (and only, so far) then forced the rents with a cosmetic rehab.

Now I'm ready to do a cash out Refi, which my current lender is willing to do at around 6.5%.

The appraisal is no charge. I know thats unusual, but so is my lender's approach to appraisal. They basically just send someone by to verify that its worth in the ballpark of what you are trying to get. So they don't do a full blown appraisal, per say.

I'm also considering making one of the units my permanent residence, which would lower the interest rate by default.

So my question is, regardless of whether I make one of the units my permanent residence or not, could I do better than 6.5% on an investment loan considering the historically low interest rates that we are experiencing (for now)

Thanks!

Paul, I'm glad you mentioned that. My situation is unique, both with my lender and in general. My lender only requires 10 percent down, and will take half of that in the form of a car title, piece of land etc.

I do wonder if I'm paying for that potential flexibility in the form of higher interest rate (6.5% fixed for 5 years with a 12% cap)

I've been in contact with them regarding this refi and they plan to send a guy out next week to do what I think isn't going to be a very involved appraisal, but which I think will be fairly accurate, and the lender will definitely do a cash out refi hence the potential seed money

Also, my situation is unique because my wife is a traveling nurse, and I'm willing to do anything temporarily. Who knows where we'll go. Its pretty much arbitrary. I was reading a few top ten lists of "best cities to invest in RE" and Omaha, Nebraska was on that list, so was Dallas and Austin, TX. We might go to Omaha, who knows? Why not go to the best place to invest and invest a while?
I'm not opposed to remote management if it doesn't reduce cash flow to untenable levels and if the company is excellent.

The city I'm currently investing in is home base, its our home town, and its on its way to becoming somewhat of a college town, with the construction of a new four year branch of Texas A&M. It was also featured in Forbes Magazine a couple of years back as the second fastest growing economy in cities with under 500 thousand people (behind Mobile, Alabama, I think.) Anyway, the possibilities are limitless, but unfortunately right now, the money isn't. Thats why I feel like I have one shot to really parlay my first property into something that will be really great. I just don't know where or what that is.

As to the Coachella Valley. We've been here a short time and will be here until at least May. I've talked to a few area real estate agents and investors at length and I think investing here would be a good bet if you could buy right.

I'm not sure of the vacancy rates on condos, but there are quite a few short sales happening and I'm told there is flip potential for sure. I think a buy and hold strategy could work with conventional leases for sure, though.

I do know there are many redeeming qualities about this area. I don't mean to rub it in, but I will since I'm just here for a bit. You guys are freezing, but I just went to farmers market and bought a crate full of fresh veggies! And the retirees love it. Whats not to love? In the winter time anyway. Summertime, I hear its hot as an anvil.

I've been on here a couple of days already and I'm loving the discussion. Ok. I'm really just getting started in earnest. I have one property, an older but stately three unit in the downtown area of my home city. I've decided to go high end with this one, but I bought it right, so right now my numbers are:

Note taxes and insurance-$860 (15 year)
Water-60ish

Rents-$2200

Like I said, I bought it right, and made some cosmetic improvements. That said, I think it could appraise for significantly more than I bought it for. My wife and I find that out next week.

Best case, if it appraises out at around 105k, (which it may not, there are few comps and the place is older)

I'll have around 30k to play with. So I'm thinking the next logical step may be to use that as down payments on more properties or just one down payment on one property. I guess my question is, what do you do in my position? I feel like I have a really good thing going here and I want to try and keep it stellar. What are your thoughts?