All Forum Posts by: Jim Blackburn

Kevin Anderson How you finance both properties will depend on how much savings you have available in bank and retirement accounts. Home possible is an excellent way to get into to the 4 flat with 5% as long as your fico score is above 720. If it's less than 720, then FHA may be better since the monthly mortgage insurance factor would be .8 vs conventional would be slightly higher. Also fha allows just 3.5% down. 25% is minimum down for 4 unit investment since you can't use home possible twice. We had to be very careful and strategic within the guidelines when sourcing "gift funds" since gift funds are not allowed for investment properties. Would love to talk more. Ask anything. Jim Blackburn

Ziaur, Your real estate is going to appreciate the same --- whether or not you have a mortgage attached to it. When you put your $200,000 on to your mortgage, your net internal return rate on your 200,000 is 0%. Rates/costs of capital are low right now. If you can borrow at 4%, and gross 10% return on your investment, then you net 6% on the spread. Of course there is the element of risk. You could lose your 200,000 by putting at risk. So, it really becomes a question about your desire for reward matched with your tolerance for risk. I'd like to talk more! Ask anything. Jim Blackburn

Casey Havenor You would want to work with a portfolio lender that allows cash out on non-warrantable condos. Ask Anything Jim Blackburn

Aaron Hunt 1. LLC protection. No not necessary. Buy an umbrellla insurance policy on your primary residence instead. It will also be much easier to find the best combination of rates and cost credits available by not closing in LLC. 2. When do I need to hire a CPA? No need for first few properties . Simply enter rental income and expenses on schedule E. so easy. 3. Do I need a lawyer on board? No. Keep your costs low. Unless you have to go to court then hire one. 4. Leverage techniques for a multi-family. Best place to start isn't to Buy a 4 unit with fha with just 3.5% down and live in one unit. 5. Opportunity costs of a rehab project vs day-job? Fha 203 k will give you the funds for purchase and for the renovations. 3.5% down of total combined loan amounts. Ask Anything. Happy to help. Jim Blackburn

David Siegel Hi! Nice to see you.. Titling property in LLC in San Diego makes it difficult to find the best financing. Titling property in LLC is also not the only way to get protection from liability claims. One other solution is by simply adding an umbrella policy in the 1-2 mil range to your primary residence. The premiums are reasonable and it affords a similar protection. I can refer a good insurance agent if you like. If we absolutely must close in LLC for personal reasons, there are just a couple portfolio options out there with rates in the 5-6 range vs being in the low 4s for conventional financing. If you purchase the property in cash, and you are hoping to cash out of the future appraised value, you must wait 12 months after purchase if closing in LLC with portfolio lender. We could get 75 % of purchase price right alway. If on the other hand, you are going with conventional loan (after quit claim deeding the LLC off title and adding your name for 6 months) then we can cash out 75% of the appraised value vs having to wait 12 months to cash out 75% of the appraised value with a portfolio lender that closes in LLC. Ask anything. Happy to help. Jim Blackburn

Ephryn, Hi! Nice to see you.. One of the best ways a new investor can get started, in my opinion is by purchasing a 4 unit property as their very first purchase. Volusia County ... Here the county loan limit for a 4 unit property is 530,150. That enables you to buy around 550k with just 3.5% down payment. That's about 20k. The seller can cover the closing costs & escrows. Plus we need to have another 3 months in reserves. Call it 9-12k.. So all together you need about 32k total saved right now. We live in one unit, and rent out the other 3. In some cases the rents from 3 may be enough to cover the living expense in unit we live in. In most cases, the rental income will make our cost of living in our unit much cheaper than it ever would be if we bought our own condo or single family house. This is an FHA loan. Typically you can only use FHA one time. Unless you have a really good letter of explanation that details the reasons why you are moving out of your current primary and into a new house using FHA a second time. (Ie. having a baby, moving to other side of town for job, etc.) If the exception is granted, then we get to use FHA twice allowing us to control more real estate with only 3.5% out of our pocket! Where many investors make a big mistake, is buying single family or condo first... then trying to acquire a 4 unit later. It's much more difficult to convince the underwriter that you are moving out of a comfortable private space , and into a building shared with 3 other families. Then you are stuck putting down 25% to acquire that 4 unit as investment VS the 3.5% FHA as primary residence. Long story short.. by purchasing the 4 unit as your first property, you're able to acquire, control, and benefit from the appreciation of 4 units with just about 20k down (3.5%) vs about 115k down payment (25%) laters. How long would it take us to save up 115k? Plus when you buy it investment you also need 6 months cash reserves as well.

Katrin Willoughby HI! Glad to see you. Ask your realtor to go on the MLS and provide 3 different addresses that should have been used for comps instead. (Sometimes appraisers are really busy or just a little lazy and miss comps that should have used to provide a favorable value.). If you can't find different comps with higher values, then you could look for errors in the adjustments like incorrect bathroom or bedroom counts or square footage inaccuracies. If there are no other comps, and no inaccuracies/errors, then you have 3 more options. Option A – Buyer pays the difference. Down payment increases by the value shortage. You will have to sign a letter indicating that you understand you are buying a property for less than the appraised value. (Value is subjective.) Option B – Purchase price is reduced to appraised value. Option C - Buyer/Seller split. Purchase price is reduced by half the difference of purchase price and appraised value. Option D – Cancel the deal. Ask Anything. Happy to help. Jim Blackburn

J R Johnston HI! Glad to see you. It appears to me that getting you financed in Texas would be simple as long as you are claiming a little rental income on your schedule Es 2015 & 2016. As long as that's the case, you're likely cash flow positive on all of these units. Both Fannie and Freddie will allow up to 10 properties financed which means we can add quite a few more without stepping outside of conventional loan strategies. Plus we can also use 75% of the going area rents in the area as part of your income to qualify. Regarding the student loans, Fannie and Freddie both require 1% of outstanding balance for student loans if payments reflect 0 or are deferred on the credit report. Unless you can provide a letter Dept of Ed, Sally Mae, or Navient letterhead that reflects the same student loan account numbers on your credit report and what the lowest possible payment would be in the future when the loan is out of deferment. Ask Anything. Happy to help. Jim Blackburn

Willy Vasquez morales -- Hi glad to see you. When it comes to financing properties in New Hampshire, I would structure the preapproval letter with 15% down as investment using rental income to qualify and with a "3% seller credit towards buyers closing costs & escrows." (We'll want to use this exact language on the contract Maximize the seller credit.). This structure will keep your cash due at closing to just the down payment. Keep in mind , you will need 6 months cash reserves remaining after closing. Generally 50% of retirement counts to towards reserves. If the total monthly housing expense is 2000, the n you need 12,000 in the bank or 24,000 in retirement. Ask anything. Happy to help. .

Shane Row Go with fha 3.5% down. In Atlanta I've seen FHA approve eligible as high as 55% DTI. Ask anything Jim