All Forum Posts by: Nathan Emmert

Are you buying an investment or a home?  A house can be either.

If you're buying a place to live that you expect to appreciate and create net wealth, you're making an investment.  From an investment point of view, it may make sense to wait.

If you're buying a home, does it matter what the FMV for it is for the next 10 years? If you never sell the property you never "realize" the loss. It goes up, it goes down, it doesn't really matter. You've locked in a 30 year mortgage at almost no interest, secured a place to live at a relatively fixed cost, and provided a stable atmosphere to begin making memories that turn a house into a home. If you're looking for that there's no time like the present.

Frankly, market timing is darn near impossible.  To say prices are peaking or a recession is looming is silly.  If they were that easy to predict #1 they wouldn't happen (interventions would prevent them) and #2 there'd be a LOT more rich people as billions would be available for those that could market time.

Financially?

#1 - Your credit score. Good credit, especially when you can go OO and take advantage of the extremely low interest rates will be HUGE.

#2 - A strong W2. Banks like to see steady income before giving a mortgage.

#3 - Cash reserves.  No books can ever teach you what a little hands on experience will.  The key is to have the cash reserves to actually survives those lessons without losing your properties, your credit score, etc.

#4 - A budget. Be real about what you can afford.

#5 - Basic understanding of Accounting.  Once you're in the business, you'll need some way of actually measuring your successes or failures.

I'd start there.

Not sure what you're asking honestly.

The Seller has 2 choices.  They either take a smaller upfront chunk (20%) and maintain 1st position on the lending by doing seller financing or they take most of the cash (80 - 85%) but end up with a 2nd position mortgage increasing their risk they won't get the remainder.

From a buyer's point of view I don't see the risk profile changing much.  The less you put down the higher your monthly payment but the more cash reserves you maintained, at least in theory.  Paying 2 or 3 mortgages instead of 1 isn't really a big deal nor is it a problem to consolidate all of those mortgages when refinancing.  Your biggest risk is probably the 5 year balloon and having an exit strategy if the property decreases in value and doesn't allow an easy refi.  That said, a portfolio loan is likely to also have a balloon but is probably more easily refinanced at new market interest rates.

Live.  

As time elapses, your life passes.

If you want a less pragmatic view, are you building the skills required to accelerate your life goals?  You don't need cash to invest, though it's much better.  Why not use some of the next 87,600 hours you plan to wait to hit your goal to learn to invest without cash and maybe speed the process up?  Or get a better education to increase your W2 pay to build savings faster?  Or flip a house on the side to bring in extra income?

You can also spend that time learning to maximize your current investments. Can you add an extra unit to your property? Have you done a cost/benefit analysis of coin operated laundry? Would some cheap kitchen upgrades increase the rent and give a large positive ROI? Have you appealed your tax rate or looked at separate metering of utilities? Have you optimized the lawn/snow care for the property to lower your expenses?

It really comes down to goals.  Are you a passive investor... an active investor... a real estate professional?  Decide how to define yourself and act appropriately.  Being a passive investor but expecting it to be your full-time hobby really doesn't jive well.

You have to appraise it how you value you it.  Do you value it at 8 long term rentals for $400/month or do you value it at 8 short term rentals at $925/month or do you value it somewhere in between?

How the seller operates the building is of little use to you.  Remember, a property simply has a value which you're willing to pay, and they are willing to sell.  Sometimes those numbers simply don't intersect.

This really isn't much different than someone saying we're renting the 4 units for "below market value" at $300/month and you can "easily raise the rents" to $450/month and then trying to do their pro forma based on $450 a month.

As for appraisals. Few appraisers care about the income method of valuation (i.e. how much rent the building generates). Most simply go by comparable units, at least in SFH (4 units or less). If you're buying a 2,000 square foot triplex, they would look to see what other triplexes of similar age and square footage sold for even if yours generates 20% higher rents. Commercial properties (5 units and up) are done a bit differently so income may be far more important. Others will be more of an expert in that area.

NOO = Non-Owner Occupied. The criteria in terms of Debt to Income (DTI), Credit Scores, etc are generally far more stringent if you will not be living in the property you are attempting to get a mortgage for.

I think you may be optimistic on how long it takes to repair damaged credit... I guess it really depends what you mean by "in the tank". It could be 2 - 3 years to bounce a score back up especially with the credit scrutiny that goes on with NOO mortgages.

I still use Wave, continues to do everything I need it to.

It's not easy to buy rent ready places off the MLS anywhere and make decent money.

Step out of your comfort zone and go to an REI meeting. Do a yellow letter campaign of your own. Drive for dollars and look for off market houses.

Sam's Club.  Don't need to be a member to buy off their business services website.