All Forum Posts by: Terry Lao

Hello BP

I've read a number of posts and discussions, and come upon this phrase a number of times. How many doors? Could someone confirm if it means door per SFR, or multiple doors for multi-family units like 4 doors for a fourplex?

Terrence

@Robbie Stanford

doesn't matter. heloc debt to income ratios will count against you either way. however, since your post said that you will draw minimum out to secure (down payment) 30 year fixed mortgage, you will need to setup the heloc first. then apply for mortgage. if you apply for mortgage first, then lender will ask where you are getting your down payment?

if you wanted to minimize your debt to income ratios, then I would find a bank that allows you do a heloc with options to raise at later time without much paper work. for example, if you do a 50k heloc, with the plan to take out 50k for down, then the max debt is 50k. however, if you took out a 100k heloc, with plans to take out 50k, then mortgage will count 100k. the only way not to have heloc against you is to setup heloc, but not use for say a period of 1 year. then lender will not count towards your debt ratio.

Terry

@Chingju Hu

After reading all these posts, there is key element missing in your original post and all the subsequent replies. The missing element is DUAL INCOME, which is essential for the bay area and silicon valley. For a $1M+ home, with $200k down, loan of 800K, you will need annual income of $200-$250k, and fico of 740+. Most home purchases are husband and wife, each making over $100k. Trying to do it alone is even harder, which is probably in your case.

I have siblings in SF and Cupertino, who bought their residence homes before investing in rental properties, but it was way earlier when prices were only "insane" but not crazy. Without dual income, you will not obtain loan unless you put down like 50%.

Terry

@Jack B. You are looking at houses. The key is multi-units, or economies of scale. The more you buy (units), the cheaper the cost per unit. One Las Vegas home can rent for $1500 per month, if example is $200k house. Same 4 plex that sells for $200k, can rent 600-650 per month, if total rent is $2400, then higher rents, and risk is lessened if one should move out. You might have HOA, like 500 per month, but costs like water, trash, sewer, is owned paid by HOA. When you run the numbers, you can achieve double digit (10%+) returns.

How do I know? I own 2 fourplex's in Las Vegas. Also, there is an appreciation value that is not even factored into the discussion.

Terry 

@Rochelle Ray; @Omar Merced interested in being on buyers list. looking for duplex, triplex, and 4plex.

Terrence

@Jared Sorrentino

There are lots ways to analyze if potential investment is good or not, like cap rate, ROI, etc. I found that due to the vast amount of listings in any city, it's best to do a quick cashflow to see if property warrants additional consideration. I like to use the 1% rule, which is if monthly rent is 1% or greater than the sales price. For example, list price $200k, then monthly rent needs to be $2000 or greater to warrant additional consideration. Also, cashflows tend to be best if purchasing multi units. The best number of units is 4 due to conventional lending versus commercial at 5 or more.

Terrence

Jared

There are lots ways to analyze if potential investment is good or not, like cap rate, ROI, etc. I found that due to the vast amount of listings in any city, it's best to do a quick cashflow to see if property warrants additional consideration. I like to use the 1% rule, which is if monthly rent is 1% or greater than the sales price. For example, list price $200k, then monthly rent needs to be $2000 or greater to warrant additional consideration. Also, cashflows tend to be best if purchasing multi units. The best number of units is 4 due to conventional lending versus commercial at 5 or more.

Terrence

brian

i have been looking at 4 plexs on Redfin regularly, sold, listing, and pending. I think this is because of the Raiders got funding from Bank of America. Also, from what I read, the NFL owners meeting at end of March looks very good. Mostly due to $750M from taxpayers and owners will not pass up free money, which is really coming from a hotel tax on the strip. 

would you agree?

terry

I have owned 4 plexs in Las Vegas since Mar'13, and regularly check Redfin for closed sales, pending, and active listings. I have noticed considerable higher than normal activity since Jan'17. There have been multiple offers and very close to listing price. The trend was about 15k lower than listing. Now, either off 5k or at listing price. I can only attribute this to rise in interest rates, spring heavy season coming around, and the hype and probability of the Las Vegas Raiders becoming reality. 

I would like to hear Las Vegas local opinions.

Terry

hello david

Your below question is answered by an actual owner of 4 plex in Parkway Villas.

One area I am considering is just south of UNLV. I believe the complex is called Parkway Villas. It has high HOA fees (~$650/month) that covers water, sewer, trash, grounds maintenance, management, and maybe insurance. Is anyone familiar with the management and/or insurance aspect of these HOAs and exactly what they cover?

I have owned 4 plex at Parkway Villas since 4-29-2016. The monthly is actual now $640 monthly and coverss water, sewer, trash, and hoa maintenance which includes pool. Also, covers gated community that has 24 security guards, and guard at main gate. From actual monthly water,sewer, and trash is about $250 per month. So if you take into the $640-250 = $390 is your hoa is you had to pay for water, sewer, and trash, which is not bad. Each unit also has a one car garage. I net about $700 per month on a 15 year loan at 4.125 rate.

Terry