All Forum Posts by: Sean McCluskey

@Clay O. Is that on an investment property? Single family? Cash out refi?

Hey BP! I'm sure everyone is actively watching the news and their impact on mortgage rates.

I'm personally losing sleep wondering if I can save more by waiting, or should I just lock in the rates today.

For those of us with loans that are well above market rate, the question of the day is: Will rates continue moving down from here? Or should a person refi immediately?

Second question that I think would help everyone: if you just got a quote, what was the rate, LTV and lender?

Thanks in advance!

@Amanda G. Wayne’s point is that your structure means the eventual buyer of the house has to agree to have 2 loans.

Why not just write it as a split of each payment that is made on the first mortgage? Or you could take the last X payments of the first?

Hi Mike,

I was definitely assuming that IN reassesses based on the sales price. I even thought that I googled it and confirmed it through other people's comments on BP / an article. So you're saying that the purchase price of an SFH in Indy for say $100k, won't flow through to the tax assessment immediately?

Meaning, if the house was previously assessed at $60k, it would stay there for some length of time, and then I assume jump up to at least the sales price on the next assessment?

@Chris Mason Thanks! Is there anything you don't know? 

It sounds like rental properties are the best bet for an immediate pop in DTI income. Interesting that the Fannie Mae guidelines aren't super specific on notes. Very nice to not have the 25% haircut + taxes + insurance on the income though.

I think the lender I'm trying to work with might have a lower DTI hurdle on the rate that I was being quoted. Working on finding that out now.

The rate was 3.65% for a 30-yr fixed about 1.5 months ago, at a 75% LTV. I'm assuming its fallen with the rest of the market since then, which is why I'm so hot to get it locked in after the next Fed meeting.

I've also thought, what if I just pay down my 1st trust deed balance a bit to get under the DTI limit, and then open a HELOC w/ a 50% DTI limit to re-access the balance? Locking in a lower mortgage balance and keeping the car loan. I'm assuming that would make sense because of the higher interest rate and 30-year compounding on the mortgage, vs the 4.5 years left on the car loan.

@Mike Dymski You've got that right! I just couldn't convince the wife to go with a used minivan w/o the power doors etc etc. 

I think Sun Tsu's the Art of War said something like "Just do what she says." Sometimes you need to pick your battles! haha

So now that I have that loan on the books, I'm trying to find a way to keep it and not sink $35k into paying it off, when that $35k can go into a rental property or a note etc.

On that note, @Chris Mason, how does income from a performing note get treated for DTI purposes? Do underwriters only consider 75% of that income? Are there any expenses subtracted from the total?

I'm wondering if I could get better DTI income per $ of capital invested on a performing note instead of a rental property owned free and clear.

Has anyone used notes to pay off a car loan etc and have insight into how that works for DTI on other transactions?

@Mark Jones As a local investor, have you heard of any structures or strategies that would allow an investor to pay the 1% owner-occupied tax in Indianapolis?

@Mark Jones Yes, 100% agreed. @Brian Van Pelt $100 of property taxes will save you $100 * your marginal tax rate (maybe 30%, $30?), on your taxes. Not $100. It's a deduction, not a tax credit. 

This is why I'm thinking about going to a lower-tax city.

@Anthony Wick I would love to invest locally but I'm not in a cash flowing region. I do agree with your premise that I could reduce expenses via a lower cost PM, or increase rent to value ratio by A) going to a market with a better ratio or B) going down market in quality. But I don't like that strategy for rollover costs, being a remote investor.

So what I'm looking at is improving the rent to cash flow ratio by going to a lower tax city. And I wanted to access the BP forum's wisdom to see if I was missing something.

@Brian Van Pelt et al

Here's a proforma of what I'm talking about.. I think my problem is that I've started getting impatient and I'm considering buying rentals via making low bids on the MLS. This would mean less forced appreciation, and an assessment value closer to the ARV than when you do a BRRRR on an older house.

But to me, this delta based on real estate taxes, multiplied across multiple properties, seems meaningful. So I'm wondering if people are managing to pay 1%? Or if there is something that I'm missing that really makes the # of available deals much better in Indy than say, Birmingham or Montgomery AL?

@Nick Giulioni et al, I agree it’s better than some places but I think my point still stands - isn’t it better to pay 0.50% than 2%? If I can get the same general characteristics for the other variables on the investment?

I’m thinking it’s worth changing markets, since I’m not physically in Indy anyway, and capture that 1.5% of assessment value per year, in perpetuity.

Just wanted to see if anyone had a similar thought and if there was anything that I wasn’t considering, like insurance or repairs etc being more expensive etc, that would offset the gain from lower RE taxes.

Thanks!