All Forum Posts by: Sean Hudgins

@Mel Volland The lender would not really be privy to or a part of the seller-financed second position. The seller would have an attorney write up the loan for the second position, and those terms could be agreed to separately. Though thinking it through, I suppose the seller-financed piece would be in the purchase agreement, so the underwriter might have something to say about that. I would think it would at least be worth talking over with the underwriters; for someone who doesn't have a load of cash sitting around, I think it is a viable option, and as I showed in the original post, the math still works out to save money monthly... seems like a win-win to me.

I posed this question in a couple of places, and the consensus is that it's more of a buyer hook-up at this point. There are only a few buyers out there right now willing to pay much of a premium. The best case, and likely the most you could ask for, would be to cover the carry cost of the extended closing time. I think that's fair, but I do feel like, eventually, buyers will start to see the value, and if the seller is willing to go through the extra trouble, they should be compensated.

How much is the ability to assume a loan at 2.25% worth? 

Let's say I have a property that I want to sell and I have a VA loan on it. Let's also say that the property is occupied by a tenant who will be vacating in 30 days and I'm willing to leave it vacant for up to 120 days as needed to complete the assumption process. My goal would be to get the top dollar for the house. Let us also say I am willing to carry the second position note for someone assuming the loan. details below on the property ( I will use a property I own and could theoretically do this with... though not planning to). I would want an eligibility swap. My goal is to see what if any amount over normal market value you would pay to be able to assume the loan / What would you change about the deal?

Location: Chesapeake, VA (large military town)

Market Value: $360,000

Loan Balance: $245,000

Equity/Second position note: $115,000 (30 30-year amortization / 10-year Balloon Payment, 6.5% Interest, $727 monthly payment) - Bringing cash for this would save a ton of money for the buyer.

Rate: 2.25%

Years Left: 26

Current Monthly payment: $1,300 (including taxes/insurance)

Current Rent: $2,000

Scenario 1: 

-If you were to purchase with a new VA loan at 7% interest at market value your monthly PITI would be approx.: $2,757

-If you were to assume the loan and I carried the second note at the above terms your monthly PITI would be: $2,027

Saving: $8,760 per year.

Scenario 2:

-If you were to bring the same $115,000 as a down payment on a conventional loan you would pay: $1,992

-If you were to assume the loan and bring cash for equity position your monthly PITI would be: $1,300

Saving: $8,304 (with no need to refi in the future)

Since this is a hypothetical situation I'm going to give my number based on nat. average homeownership of 13.2 years. My personal opinion is that this would be a very buyer-dependent situation. If they were staying for 2-4 years probably would not be worth much more to them. however, if this was a home they planned to keep for 10+ years I think there is a huge value here. 

so let's go with 13 year scenario:

total savings would be approx. : $107,952 over the 13 years... I think it would be fair to ask for 1/3 of that savings as an incentive to assume the loan... so approx.: $36,000

Fair?

So could you see paying over the $360,000 Market value and by how much? 

If you would pay over market value how did you get to your number? 

I agree with Jayson about local lenders and building a relationship. If you are planning to do more deals that may be a route to pursue or you can always go for the local broker that may be able to help you do business down the line as well. 'The Broker' based out of Chesapeake is a great mortgage brokerage. Ultimately though the lowest rate you can find with the least fees is the way to go.

Great looking home! where in Norfolk did you build this in Norfolk (unless you are still keeping a secret)? I don't see many new builds in Norfolk usually but I love to see more being built there I think there is huge potential for builders in Norfolk.

Congrats!

Shawn,

Congrats on the homes, I know this kitchen struggle well. we had a similar situation in our current live in flip. I would suggest a couple options for you to consider.

option 1. same as your option 1 but also replace the windows if at all possible with the correct hight windows that would fit over a counter top space. depending on your exterior siding this could be super easy or not. we had vinyl siding so it was as simple as removing siding and framing in the old window hole to accommodate the new window. (its like 2 2x4s worth of wood and some nails. and a new window.) this would give you a lot more space for counter tops.

option 2. remove that wall between dining and kitchen, if its load bearing get the permits and put in a beam. we also did this on our same live in flip and the beam cost about $800 and labor would have been around 3-5k. obviously this is the more expensive route but then you could have an eat in kitchen space and then if you can remove the wall with the closets you would have completely open concept. One caveat though is make sure the budget can handle the extra expense of the wall removal as well as the additional cabinetry that you would need to expand the kitchen. cabinets for a small kitchen vs big kitchen can get pretty pricy.

I have included some before and afters below. you can see the beam that was put in as well as the window over the sink that was changed out from a full length to one that fits over a counter. 

Eric,

Congrats on getting your license and starting the journey. I totally agree with Sam especially as a new agent it helps immensely to spend some time on a high performing team. wether you are on a team or not definitely look for a good culture in your brokerage, ask to attend some team meetings if possible and make sure you get along with the other agents. 

whatever broker you go with be sure to try and avoid the many traps out there for agents, lots of groups that will charge money or lead sources that don't get you any where and charge you lots of money to be a part of. I think if I was going to start over I would find a great team and commit to their processes for a year and build a solid base for what right looks like, then I would consider branching out on my own. It is definitely a learning process. 

I would be careful doing to much before you sign with anyone as there is a potential to be breaking rules if you are advertising yourself as an agent without having your license hung with a broker.

David,

Im in the Virginia Beach area if you have more specific questions on this area. Are you looking to pay cash for all of these properties? we have some great options here between Virginia Beach and Chesapeake, if you are looking to be with in 25 min of the beach just about anywhere in this area would work. you may be able to find some great investment properties in surrounding areas but I will say 800K is going to dry up fast if you are looking for 4k in cash flowing properties on top of a primary residence in an A neighborhood. not to discourage you at all, there is plenty of opportunity in this area and Virginia Beach has great Equity opportunity compared to some surrounding cities. I also believe that as people get priced out of the more southerly states like FL or they can't get insurance because of weather Virginia Beach is one of very few options here on the east coast and it is probably the most protected from hurricanes on the whole East Coast. 

I also lived just outside Cleveland OH for about 15 years growing up and although it has a beach you will only be using said beach for about a month and a half lol. my biggest complaint with that market is that because you are so close to the lake you have extra snow to deal with in the winter and it is over cast for the majority of the winter. Not sure where you are coming from but I would definitely visit Cleveland in the dead of winter for a couple weeks before I moved into that market especially if you are coming from a place like CA (just a guess). Now investing in that market I think could be very lucrative, I would say the same about the Cincinnati market and hey they have the Ohio river.

I always had great conversation with people at my different commands. some would listen to me ramble on about how great it was to invest and seemed interested but many never pulled the trigger. Most of my sailors would just reject the idea and say you can do that because you're an Officer. I don't disagree necessarily but many times they were simply not willing to make the sacrifices necessary to go and do it themselves.

thats why I was so excited to find out that one of my E-6 sailors was crushing it as an rental investor. He was already a millionaire because of those properties. I always pointed people his way to prove that it could be done on an enlisted paycheck.

I love Richmond as a place to invest. I personally do business and invest in Southern Hampton Roads because I know the market well, but that being said Richmond has great prices and seems to be an up and coming city. 

Personally I think from Richmond all the way down here to VB is an overlooked area, and could really become a hot spot as people get priced out of the more southerly beach markets. I would definitely take Taylor's advice and make sure you are not buying site unseen in any market really, and build out a solid team. If you're living in a van I would suggest bringing it to the areas you are interested in and stay for a while and build that team, while also familiarizing yourself with the area.

Best of luck!