All Forum Posts by: Jim Blackburn

@Cristine M.

Supposing you are selling your house for 1,500,000. You receive 5 offers below. Which one will you select?

A) 1,550,000, no realtor, no bank approval letter. Close in 30 days.

B) 1,300,000, cash offer. Close in 5 days.

C) 1,450,000, no loan contingency since fully underwritten and approved already. Close in 15 days.

D) 1,500,000, 21 day loan contingency. Close in 40 days.

It’s extremely important, especially in California, to prepare your financing in advance before shopping for a house.

This is because most offers were competing against in California are cash offers, and the only way to compete with cash, is by offering a higher price with a fast two week closing.. And the only way to do that, is by getting a fully underwritten loan commitment upfront before you shop for a house.

Not just a “preapproval letter” but an actual loan commitment which means an underwriter approved the loan. This allows you to waive loan contingency on your offer and close 3 weeks faster than someone who hasn’t already gone through that process.

The competitive advantage here is huge… Because you can have and times get a purchase price excepted for 10 or $20,000 less than your competitor who requires a 40 day closing…

Time is money, especially to sellers who are under contract and purchasing another house and are dependent on the sale of their departing residence to buy the next house.

@Dennis Gallof 

I recommend Anakarina Callejas for Florida insurance. 

@Andrew M Hawkins

it all depends...

Do you want to work with a male or female agent? 

Do you require that they have experience with renovations? 

Do you require that they have experience with condos, single family, or multi family properties?

Do you have the funds for closing or will you require expert negotiating skills that capture up to 6% seller credit or Realtor commission credit towards your closing costs? 

Do you want to live in the property as your primary residence or purchase as investment? 

@Gaby Liu

1. First issue is just 20% down.  Generally with investment properties, buyers put down 25% to get the best rate. 

2. Second, both are charging discount points which it seems you could find a lender without points. 

3. Both have estimates for Owners Title (which is normally paid by seller) unless it's REO or short sale.

4. Neither have shown the seller tax proration credit that you may get at closing from the seller. 

5. Did you realtor negotiate a 6% ($4800 seller credit towards your closing costs and escrows)?  He/she should have just increased the purchase price and asked for the credit back to keep 5k more cash in your bank account after closing. 

Otherwise, in general, the closing costs do not seem high at all with either lender. For example, when I finance properties in Florida, and New York, closing costs can be $10,000 - $50,0000 because the states have hefty mortgage tax.  Welcome to the world of Real Estate Investing and Financing. 

@Yair Sykes

If you cash out up to 90% of your primary residence to use the money for purchasing/renovating the investment, you will get .375-.5% lower costs of capital on your 30 year fixed rate or 15 year fixed rate mortgage.   

Otherwise, in general when you purchase investment properties with investment mortgage loan, the rates are higher.   Also, in general when you finance an investment property with a mortgage, you need at least 15% down, 25% down to get the lowest mortgage rates. 

@Vincent Dang

If you were going to need back surgery, would you hire a surgeon or try to learn how to be a surgeon yourself? 

You want to hire a good mortgage broker who has access to 150+ banks and can shop the market offerings for you.  From there, the broker can provide you with a detailed breakdown of rate and cost offerings for your situation.  

Time is valuable so usually the highest and best of our time is focusing on where we can produce the highest results and team up with others who excel in the areas that we do not.  

Jim

@Jose Vasquez 

Do claim the rent income on your tax returns (either 1065 or 1120 or schedule E)? 

Do you have a property manager or you manage yourself? 

How many income properties total in the portfolio?

Are you able to prove financial responsibility with payments made on time to any creditors over the last 12 months?

This should be relatively easy if the rent rolls are more than the expenses.

@Dirk J Mc Kenzie

@Dirk J Mc KenzieI concur with all shared from Geordy! Nice response. 

I would also add that it's helpful to have a commercial broker go to market for you and find the most attractive combination of rate/cost credit offers based on your project.  That will be 90% of the qualification while the other 10% will be the experience of you and your partners as well as financial responsibility exhibited in the past.  @Geordy Rostad@Geordy Rostad

@Asprulole Vue

A buyer can cash out refinance his current lender within 1-60 days of closing on the real estate for 75% of the purchase price. 

If he would like to cash out 75% of the higher appraised value, then he needs to wait 6 months from closing date.  

@Karen Jackson

Would you like to keep the $300/mo FHA mortgage insurance forever?

Does it make sense to go through the process of removing the $300/mo mortgage insurance while interest rates hit are at their 3 year bottom or wait for rates to go back up before refinancing? 

Are you planning to keep this property for 2 years or is there a 50% or greater chance that you may sell it and use the equity to purchase another property? 

Is this property in a romantic area that will attract renters for the next 10-15 years -or- is it in a less desirable area that could cause you headache to rent it out?

Jim