All Forum Posts by: Sandy Salazar

Hi Stephanie,

If you purchase the property free and clear and its owner occupied, depending on the lender you may have to wait 6-12 months as mentioned by @Kyle J.. Now would you be doing a refinance to take cash out or doing a HELOC (home equity line of credit). Also, sometimes it depends on the value of the property, some banks have a minimum amount they are willing to loan out on. I am not sure how the prices are up Sacramento, but I had purchased a condo for 45K cash that I still can't cash out my equity. Call around local banks and get a firm answer if they're willing to refinance for cash out for x-amount. Good luck!

Hi David,

Welcome to BP! First step is being on here and reading as much as you can. There is a wealth of information here on BP, and if you have any questions, post it here, you'd be surprised with how much feedback you get. Next set up your keyword alerts so you can be alerted anytime there is a blog post or forum that piques your interest. For example some of my keywords are california, seller financing, multifamily residential, commercial property... I am not sure what your "day" job is, or living situation, or what kind of finances you have, but look up house hacking here on BP. Its purchasing a property like a duplex, triplex or fourplex and living in one and rent the others so they cover your mortgage and expenses and you'll get to live for free or close to it. You can do FHA loan that will allow you 3.5% down payment as long as you are living in the property as your primary residence. If you can't afford a multifamily, you can look at single family residence, purchase it FHA, and rent out rooms in your house (if you are single with no kids of course, might be difficult to do so if you have a family). But that is a start that can help you get your foot in the door. Sometimes the best education is learned along the way and you figuring stuff out as you go along. Try multiple REI meet ups, you may have to deal with a lot of investors who want you to pay for their classes, but every meeting you attend, make an effort to meet someone new and learn something new. A lot of times these investors will just brush you off unless you purchase their classes because they see you as a newbie who may or may not last long enough in their real estate world. (btw don't purchases their classes, all the info i've ever needed I've found on BP), where as if you don't lose focus, keep being social and network, show yourself to be of value to them. (offer them to be an unpaid intern if possible) they might come around and give you more in-depth information that will be of value to them. Remember you are their competition right now, unless you can provide them with a service or value they will appreciate. Best of luck!

@Noah N. you said you want to do duplex, most likely FHA, don't forget that you need to live in the property for at least one year if you will be going that route. If that's the case, go to your mortgage broker/or bank and get a prequalification, they will tell you how much they will finance you based on your income, savings and your intentions of using the property as a primary residence. Then you take that number and try to find properties that are under that and that will meet your cash flow criteria, taking into consideration closing a costs, potential rent, potential vacancies, repairs, maintenance, management and Cap x.

best of luck!

Moshe Eisenberg I was informed by my lender that if I wanted to cash out on an investment property that is owned free and clear I had to wait 6 months after closing. I don't know why. I'm not sure about the LLC though.

Hi @Yenipher Barrientos

Do you do insure commercial residential properties/ small apartment complexes (under 30 units)?  Would love to connect with you.  Thanks!

Hi Brandon,

Fellow Bruin!  Title insurances insures you that when you purchase the property, the title is free and clear.  That there is not someone else claiming they own the property, or any liens on it that have not been paid. Here is a simple read article online, I hope it helps.

http://homeguides.sfgate.com/purpose-title-insurance-2571.html 

@Brandon Chipman No problem! Although I can't take credit for that detailed breakdown, another BP member had posted it a while back and I saved it for my reference.  There is so much information here on BP sometimes typing in a few key words will give you a lot of information, questions and answers to things that you didnt even think about but should know.  Best of luck @Josh L. and lets all connect being we're all southern californians =).

You're welcome @Carlos C. and keep us posted.  BP is a great resource with a lot of information. Best of luck!

Welcome @Carlos C.,

you can have more than one FHA loan at a time, but there are requirements and these requirements vary based on lender. Most traditional banks will not finance a secondary FHA loan, you would have to go with a smaller portfolio lender, credit union or mortgage broker would be your best bet.

However in order to qualify for a new FHA loan and keep the existing one, you would need to either show that the current home you're in is too small. For example you out grew it, it was a two bedroom, but you got married and had two kids (a boy and girl) and now you need a three bedroom (a little hard to pull off in one year unless you have twins =) ); the other option is that the first property you financed as an FHA is a very far commute to your work, and now you found a closer property that you need to relocate ( the properties cannot be in the same city if you're using this reason and I am not sure how far apart they could be). Of course you would need to specifically check with your lender to see if these are your options. It varys between lenders and state. (this is what I was told by my mortgage broker in California).

A secondary option is that you if you purchased the property for very cheap (below market price), that even though you put only 3.5% down, the property appreciated in one year that you have that 20% equity from the appreciation and your below market purchase price. You can refinance it out of FHA into a conventional loan, include closing costs in your loan, and re-apply for a new FHA loan on the new property you are planning on residing in. This is what I had done (without reapplying for an FHA loan). From the time I purchased my property as an FHA it appreciated almost $50K that my LTV was less than 75% so I was able to refinance it out of FHA with ease.

A third option (and depending on your lender and/or state), but if you plan on occupying the next investment property as your primary as you mentioned earlier, there are loans that are not FHA but conventional 30 years that only requires 5% down payment (but again, the property needs to be a primary residence).

Of course this will vary on credit score, annual income, income to debt ratio needs to be considered especially since you will be having to deal with two property loans, and other general qualifications (PITI reserves). (If you're planning on using income from the rental property to increase your annual income, your lender will only use up to 75% of the rents toward your income, something to think about).

You do have several options, my suggestions is to find an investor friendly mortgage broker/credit union/banker and explain to them your goals and how best you can achieve it.

Best of luck!

None of my properties come with a refrigerator.  It has always been the tenants responsibility to bring one in. It's up to you if you wanted to include that in your property.