All Forum Posts by: Greg Szymbor

 haha, hey whatever gets you going in the morning!

 Great one!

What are your favorite real estate motivational quotes? Here are a few of mine;

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Don’t wait to buy real estate

Buy real estate and wait

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Yesterday

Now

Tomorrow

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Don’t be busy

Be Productive

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Please share yours!

What is PMI?

PMI, or private mortgage insurance, is a lender's protection in the event that you default on your primary mortgage leading to foreclosure on your home.

Lenders typically require a down payment equal to 20% of a property's purchase price when borrowers apply for a home loan. If a borrower is unable to afford that amount, a lender will typically look at the loan as a riskier investment. In which case they will require that the borrower take out PMI.

PMI may cost between 0.5% and 2% of the entire loan amount annually and is usually included in the borrower's monthly mortgage payment. However, there are annual and one-time payment methods as well!

For example, say you had a 1% PMI fee on a $150,000 loan. The fee would add approximately $1,500 a year, or $125 each month, to the cost of your mortgage. If your lender allows it, you may be able to do a one-time charge of 3-5% of the loan amount at closing.

If the mortgage insurance was financed at the time of origination and is canceled prior to its maturity you may be entitled to a REFUND if the refundable option was chosen at time of origination. However, if there is no refund/limited option, this would negate any option for a refund. Talk to your lender and see if you can get REFUNDED the PMI payments when you reach the correct LTV ratio!

When your loan reaches an 80% LTV, you can request that your mortgage insurance be cancelled; this must do in writing. However, cancellation at this point is still done on a voluntary basis by the lender. It's not legally required until the 78 percent pay down level is reached!

Private mortgage insurance should not be confused with credit life insurance; it will not pay your mortgage each month should you become disabled, unemployed or deceased, and pays nothing to you or any of your beneficiaries. And remember PMI has been tax-deductible since 2007 and, by an extension voted by Congress, it is also in 2018.

Looking to grow and gain experience in my journey of real estate blogging, so constructive criticism and feedback is encouraged!

Always love a good house hacking story. Great job; you received a cash flowing property and gained, by the sounds of it, a lot of experience!

Shawn

I hope you get good news back from your mortgage broker!

Well i'd have to pull up the closing docs but my mortgage broker was able to financing all closing costs that the seller didn't cover right into the loan. At the time I just said great!!... and didn't ask too many questions, but I would assume it had to do with fact it was a FHA loan.

This is my house hacking story that will go into a little depth of how I got into real estate, live for free, and show some rough numbers of my first rental property. This is my first “blog/forum” and this will help me achieve my goal of sharing more experiences and information through blogging. Hope you enjoy!

Roughly 5 years ago I purchased my first 4-unit using a FHA first-time home buyers loan. It required 3.5% down, had a low interest rate, and allowed me to finance my closing costs. The purchase price was $140,000 and I was able to finance the closing costs to make my total out of pocket investment around $5,500 after inspections, fees, and down payment. I moved into a one bedroom apartment that required some TLC and updating. The other three units were in turn-key/rental condition. I did the work on the one bedroom myself while living there and racked up a construction bill of $4,000.

Total Out of Pocket Expenses: $9,500

The PITI (principle, interest, taxes, insurance) plus MIP (mortgage insurance premium) is around $1150. The average cost of expenses for this property over the last 5 years has been $550 a month.

Total Monthly Expenses: $1700

The three remaining units rented out for an average of $2100 a month over the last 5 years. Vacancy rate on this property has been extremely low at 2%.

This gave me an average cash flow of $400 a month. Now, I realize this isn’t a true ‘cash flow’ number. I do factor in a property management fee, long-term repair budget, and vacancy budget. However to make things easier for my first blog I will keep things simple. Over 5 years this piled up in my bank account and is now at $18,000 (includes some vendors not included in the monthly expenses)

I recently got the building appraised at $190,000! Subtract my mortgage which is at $135,000 for a total equity of $55,000! Not bad considering other people have been paying ALL my living expenses.

So over the last 5 years I have earned my initial investment of $9,500 back, earned an extra $18,000, built up equity of $55,000, and lived rent free all off one property! This has allowed me to invest in other rental properties and create a decent sized portfolio!

There are multiple types of loans home owners can get on 2-4 unit properties as long as it is their primary residency. I recommend talking to a loan professional to determine which option is right for you! I strongly recommend jumping into real estate this way. I have zero regrets on my first property because it has allowed me to continue investing in real estate by creating a “live free” environment.

Thanks for reading and I hope this story helps someone! Feel free to leave feedback and constructive criticism is always welcomed!

Good advice!

I do something similar where I will send out a call/text to the applicant the morning of the showing a reminder of the time and to contact me if they will not be making it. I also always make sure to schedule all showings around the same time during the same day, generally 15-30 minutes apart for apartments (add a little extra time for single family homes). This way if someone does not show up I just simply wait for the next showing and with my morning reminder I rarely will get a no show.

One thing I started resulting doing because of the volume of calls/showings I was setting up just to find out the applicant doesn't meet my criteria is phone interviews. I have a series of questions I ask everyone over the phone when they first contact me...if they pass my little interview I tell them the available showing time is.

Well Joe,

A little after a year of owning my first 4-unit I got a conventional loan on a 3-unit in the same city. The numbers have also been working great on this place and plan on writing another "blog/forum" explaining how I obtained it.

After getting my real estate license and co-founding a property management company in my local area I'm back on the hunt for another property! I hope to pull in another 3-4 multifamily shortly.

Thanks for reading Ethan.

I found my property through a multiple listings service based in my state. The MLS is a great source of knowledge on a property. I know plenty of people that will use real estate sites such has realtor.com or Zillow.

Always think of expenses. Just when you think you have all your numbers in place and feel confident with the results run them ten more times. I always round my income down and expenses up. I feel this is a great way to do it because your looking at it as a "worse case" scenario.

Hmm that last question is a little tricky. I went to a mortgage lender that I knew personally and sat down with him multiple times to come up with a plan to get my real estate investment plan on the move. So I had a solid rasp of what hoops I was going to need to jump through. I would say that finding a great bank/lender that you trust is the best way to deal with an FHA loan!