All Forum Posts by: Brandon Cao

@Phil C. I didn't realize there was a zoning issue with it until after I bought it.  So when I went down to get my Housing Inspection License from the Municipal Building in Philadelphia, they told me that my zoning was for a Sandwich shop and 2 residential units (most likely was a variance since my duplex was a rowhome).  They actually forwarded me to the zoning department, which is in the next room over.  Just note, come with a lot of free time and a check book because each time Philadelphia transfers you from one department to the next, you have to restart your wait time and crack another check, if you catch my drift.

The zoning department reviewed my change on an application I just filled out at the Municipal building and they changed the zoning right then and there.  Just make sure your building can be zoned for a multi-unit if you have a multi-unit.  Subsequently, I was pushed to the back of the line for my original intent, the Housing Inspection License.  All in all I was able to get the license the same day and eventually had it rented out.

Now that I think about it... Perhaps I just missed out on the perfect opportunity to start my enterprise in making Gyros and Chicken over Rice.  

After you posted about the Mortgage Assumption Value, I looked that up.  Very interesting.  That can definitely help maximize the value of the home.  

So I guess I have a couple follow-up questions. I looked online on FHA.com (an unofficial FHA website) and they said to qualify for the FHA loan for loans made after December 1, 1986, "FHA approval and borrower credit verification are required. The 'new' FHA rules governing loan assumption requires the borrower to qualify much in the same way he or she would qualify for any other FHA home loan." Does that mean the buyer HAS to be a first-home buyer? Or can a person who already owned a primary residence in the past assume the FHA loan.

Secondly, is it possible for a person to take out a personal loan to get the downpayment number and then assume the mortgage? My thinking is that this is possible as long as the borrower can qualify under DTI and other lender metrics. Thanks for your input so far guys, this is very helpful!

Thank you so much @Joseph Zanazan , your insight into the FHA loan is greatly appreciated. I'm very glad that the FHA loan maintains its integrity when transferring among individuals. Assumptions will definitely sweeten the pot for a buyer-seller transaction particularly when I locked in such a favorable interest rate. Thanks!

@Tyler Mills Thanks for the correction on the %LTV! That 2% does make a huge difference, probably about a 12 month difference in equity for my loan if paying down principal at the normal rate.

Hello All,

I may be selling a triplex in a few months that has an FHA loan attached to it. Note this FHA loan was originated before the June 2013 change that makes PMI last the life of the loan. Instead, since it was originated before June 2013, the loan has the option of removing PMI after 20% is paid down AND 5 years has passed from loan origination date.

My question is, if a potential buyer of my triplex would like to 'assume' the FHA Loan that still has the PMI (i.e. being sold before the 5 years is up), does:

a.) The buyer still have to pay PMI if the appraised value during sale exceeds the loan amount such that the loan amount is <= 80% equity

b.) If the assumed loan has PMI, is the 'option of removing PMI' ability grandfathered into the loan?

c.) Does the start date of the PMI counter (5 year counter) still remain the loan origination date or is it now the start date of the buyer's assumption of the FHA loan?

I can't seem to find these answers on the internet.  Someone out there must have bumped into this question at some point!  Thanks!

@Avni Choksi have you considered investing in Real Estate Investment Trusts (REIT) until you settle down into an area? Might be a good way to get some exposure to real estate market, without being tied down to a specific area. This might be a good alternative for your investment figure and your job rotation.

I'm still a little frightened of Nicetown, but perhaps @Mary B. found a sweet spot nearer to Temple. I remember I was about to look at a duplex in Nicetown that was being renovated and was 70% complete. Good price. When I asked my realtor to see if we can go look at it, he said that the owner just got convicted of some crime and was going to jail. Not sure how that works, but I didn't really want to deal with an owner who would potentially sign title over in a cell!

On the flip side, everyone has a reason to sell, so it could have been a small sample size. It might be a good idea to get a feel for the city by visiting sometime and driving through some neighborhoods with a Realtor.

If you are an out-of-state investor investing in Philadelphia, I would recommend staying away from North Philly (and Kensington). There are some good areas around Temple, but it can get pretty dicey a couple blocks in the wrong direction. North Philadelphia is a totally different animal than CA. I have a vacant property in North Philly that I installed an alarm system and a couple flood lights so copper thieves don't get in.

Other problems with North Philly:

Bad School District (well Philly in general has bad School Districts)

Crime (both soft and hard)

Drugs, my friend saw a man in a suit selling "pizzas" in the middle of Broad Street. Broad Street!

I don't think your house would necessarily depreciate in North Philly, but could very well be abused to the point where it depreciates. It's the place that looks good on paper, but not so good to invest in. If you do end up investing there, I would recommend Section 8. As to your last question, I don't believe North Philly is up and coming, unless you go to the Temple area for the students.

@Account Closed pointed out, they require 2 years of rental income to count towards DTI ratio.

I know Manayunk and one alternative is to rent out rooms in your apartment. You could probably fetch at least $500/rm. Although it definitely depends on your comfort level and the size of your house.

@James Wise I think so too!

I'm wondering if anyone had any other success with other brands or if you use Allure what is their most successful color preference/style of vinyl planks. I feel like Oak brings a homey feel to a rental, but I believe Cherry brings in sophistication and class. Anyone else have preferences they would like to share?

I did a quick analysis using the 50% rule:

Purchase Price: $65,000

Downpayment: $16,250

Loan Amount: $48,750

Mortgage Payment assuming 5% interest rate over 30 year amortization: $261.70 (not including Taxes or Insurance)

Total Rent Received: $825

Expenses assuming 50% rule: $412

Total Net Income: $412 - 261.70 = $150

Not terrible! Believe me there are people out here that have made way worse deals. Myself included. You learn to structure your deals better in the future.