All Forum Posts by: Ram Chandrasekaran

Hi Jon
Forgot to ask you about the 'Shortage' loan. If in case, I decide to go that route by selling it for $300,000 and cover the $110,000 with a new loan. Is there a lender who will be willing to give that loan? Or is it private money or other loans you are talking about? I am not buying a house and would the conventional lenders give that money assuming I am going to buy a house or should I get that loan saying that I am going to buy a house? I am little confused here. Please clarify.

Cheers
Ram

Thanks for the detailed information on the assessment, Tbone. BTW, ideally the assessor (lets say) comes back with a 20% reduction in the home price does that mean the lender will also reduce the loan amount by 20%? Or only the property tax decreases based on the assessed amount? Or should I go back to the lender and say that the assessor has reduce by 20% and that they have to reduce the loan amount accordingly? Please clarify

Yep. Currently, we are good to go as far as the job is concerned. However, in the next 5-6 months we might have to move to South Bay (work related) and not only the charity part of it... Again, I am not giving reasons to move there but thats a fact. Reason being, IT industries are densely populated in the South Bay as opposed to Concord and the neighboring areas. Yet, I see what you mean by suggesting to stick with this house if there is no ABSOLUTE NEED! :)

Now the only haunting figure is the resetting interest rate in 2010. God! You guys are making me THINK... LOL.

On the 2nd point, AGREE!! The reason why I wanted to invest is to make money there in the next 3-5 years and pay off this house... Those were my plans... Oh yeah! I see the IRONY.. LOL. Only since last year have I had the point of realization to manage my personal money better. That means, WAY BETTER!!

Thanks a TON, again to the both of you - Jon and Tbone... I will do my homework and will keep you posted!

Hope to catch up with you sometime in San Jose, Tbone... ;-)

Cheers
Ram

I like the $270,000 idea but the only problem is I do not have enough to cover the rest of it! The max. I have is $50K and that hardly is $320,000 and obviously hardly close to the purchase price!! I will research more on the Short sale and also the assessment and see which will give me the best option to get RID of this ALBATROSS!! Mistakes take a day and correcting them takes FOREVER!! - Courtesy - From my personal experience. LOL.

This HURTS!

Tbone: Can you point me to some website or docs to read more about the Assessment request? Is it the County Assessor's office website? And let me know any other information that you might find appropriate.

Thanks a Lot to all of you for sharing your thoughts and suggestions!!

Cheers
Ram

Jon and Tbone
This is getting better and better for me! Seriously, I am really 'Biting the Bullet' right now, how "Little Knowledge can be TOO Dangerous"... Anyways... :-)

Tbone: Yes, you are right on "Grounding ourselves" by buying this house @ $410,000. However, that was ONE of the IMPORTANT reasons why I wanted to get in to RE investing and learn as much as possible... I am just starting out so it might take another year before I can call myself an investor (owning at least a SFR investment rented out for positive cashflow). LOL.

As for selling this house right now, thats the thread going on with Jon (Wheatie) where I was wondering if a short sale will reflect on my credit score. I vaguely remember reading in one of the foreclosure investing books that Short sale will not be reported in my credit score. Apparently, my wife and I are both on the mortgage and if we short sale or foreclose, we dont want to have it reflected on our credit score (at least we need to find a rental)...

That apart, let me come to you with the exact numbers. Sorry Jon, I thought I gave all the numbers... here you go!

1st Loan: $287,000 @ 5.25% 5 Year ARM. Resets in 2010 and might be 10.5% (max. as per the mortgage document)
2nd Loan: $120,500 (current) - Actual: $123,000 @ 8.75% with a 15-year Balloon loan

We recently called one of the agents we know and she gave us comps at $250,000 and max. our house could go as per ZILLOW - $270,000. That being said, our stumbling block is not our financial status, neither is our unwillingness to sell it (No pun intended, Tbone). Fear that our credit score MIGHT be affected. Secondly, even if it does not lead to a bad credit score, would that be public records (if short saled)? Though the score might not be affected it still would pose a threat if seen in our public records. True? and does that make it difficult for us to rent.

And the reason why we are holding on to this property and not opt for short sale and the like is due to the fact that we can at least break even 5 years from now. Well, I do accept the fact that it is not going to any better in the next 2 years so it will not be in the next 5 years (but better than what it is right now).

As for the rentals in South Bay, I agree Tbone. The rents are higher than what it is here and thats one reason we are looking for a 2 Bed 2 Bath which itself is about $1700 a month (and some @ $1400 - $1500). But anyways, we will out of pocket an additional $300 - $500 based on the numbers you and Jon highlighted.

As for the lease option, I dropped that idea because none is going to buy in for a 1-yr lease that would be sold for $410,000 at the end of the year as 2009 is going to all the more WORSE (in my opinion)! :-)

In summary, request your suggestions and it is already a very good thread for me to learn more.

NOTE: The assessment IDEA is GREAT. I will try that for SURE, Tbone.

Cheers
Ram

Thanks Much SlimJim for your inputs... I am planning to put a FOR RENT signboard this weekend and see how it goes.

Wheatie: I was having this thought last night... Let me give you some numbers and I am sure I am digressing a little bit from the Rental (to Short Sale). Here are the numbers:

Sale Price in Sept 2005: $410,000
100% Financing
Monthly Mortgage: $2312.00 (does NOT include Taxes and Insurance)
2 Loans: 1st loan interest only (although we pay principal periodically) - 5 Year ARM (resets in 2010)
2nd loan Principal and Interest: 15-Year Balloon
Max. rent possible: $1850 (I think)
If I put this under a LLC and buy additional Million dollar Liability Insurance that would cost me about $2000 per year - Please correct me if I am wrong
Last year (around mid-2007) County Tax collector office sent a letter and specified that our house has been re-valued at $360,000

My thought last night (after I posted this topic) was: Find a wholesaler in Bay Area and sell it to them for $410,000. We have cash to cover the closing cost

1. As for your short sale, how can I do it without showing enough proof that we are unable to pay the mortgage - our financial statement most likely will not indicate that
2. If I do a short sale, what happens to our Credit Score?
3. If I talk to the lender, what sort of adjustment am I expecting from them?

Request your response. Any help is highly appreciated.

Cheers
Ram

Team
We have decided to rent our house (that we live in) and move to South Bay in CA. We are planning to rent a house there and NOT buy one. Well, thats the discussion I had with Wheatie and Christian. Anyways, have a few questions:

- What are the websites frequented by renters other than Craigslist and Kijiji?
- Is there a website that will give me the fair market rent in our City. www.huduser.org gives only the average so I am not sure what rent amount to quote in our ads?
- We have a 3 bed 1.5 bath 1185 sq. ft. townhouse currently advertised for $1850 monthly rent
- If someone is interested what do we do after credit checks? By that I mean, do you go the title company and request them to facilitate the new tenant process and things - I will be reviewing the docs with my attorney prior to this step that I need signatures from the tenants before we go there

Any other information that may help me renting out our house.

P.S: The reason that we want to rent our house and we in turn renting another house is because:

- At this point we are unable to sell the house as it has depreciated from the value we bought it for
- Some personal requirements needing us to move to the south bay

Any help is highly appreciated. Have a great day.

Cheers
Ram

Hi Steve
Welcome to Bigger Pockets. I am interested in Nashville, TN properties. Do you help people like me (Beginner Investors) find a couple properties to start with and go from there? Looking forward to work with you.

Cheers
Ram

Wow! Then I stand to lose... LOL. I am about 740 now and that means I might not get through this 5% down payment! Thanks for that, James.

And No, I am not a VET. Is that another requirement for this loan? I guess not. Pardon my ignorance.

Cheers
Ram

Sorry James. I was a little enthusiastic and forgot to mention the "Disclaimers"! ;-). well, not really 'Disclaimers'. They are a Real Estate Agent company and one of their agents is whom I know from the investment club meeting.

As for the Cash Flow, he wanted the group to select what we are interested in and he will send the detailed Cash Flow (financial) sheet. Thats the story! :). On the 5%, I thought thats something you can leverage with VA and FHA loans. Isnt that true?

Cheers
Ram

Hi JB
I am a beginner Investor and with the limited knowledge I have, here is my theory:

- The CA market appreciated 100% in 2 years (between 2004 and 2005)
- The average appreciation I have heard is 7% (max.) for Real Estate
- I live in CA too and I bought my house at the market peak which has depreciated

Questions:
1. Did you research the fair market value for the property in the area you are looking to buy?
2. I am not sure if all the auctions are bid @ 70% by the pros. There are occasions where it could be 65%, 60% or 50% too
3. If you are willing to bid at 80% and make a deal, you also would have to calculate how much you will spend on the property for rehabbing before you move. If you spend the remaining 20% on the house for rehab, you are essentially buying it at the listed price
4. What if the appraised home value is less than 60% while you buy it @ 80% of the listed value? You will still be at a loss (at least for the next 5-6 years from what I see)

Finally, the house I bought and living was listed for $410,000 at the market peak, when we were about to close we came to know the previous owners bought if for $240,000 in 2003. The appreciation was close to 80%. Now the depreciation is ~ 20%, however to get back to the price we bought it for, it is going to take at least the next 3 years (or may be more in my opinion). In CA, buying even at 80%, I would still give IT a THOUGHT!

This is only from my personal experience and theoretical knowledge. Thought I would share it with you.

Cheers
Ram