All Forum Posts by: Kathy Utiss

Kinda confused where you get such numbers. Or how buyer is doing financing. Being a quad it qualifies for FHA financing. Usually is 3.5% down. $900,000 x 3.5% is only $31,500. According to this

Generally, the most you can borrow with an FHA loan is $420,680. That applies to single–family homes, with limits increasing for 2–, 3–, and 4–unit properties and in higher–cost counties. The maximum FHA loan amount for a 1–unit property in a high–cost area is $970,800. And for a 4–unit home, it's nearly $2 million. Dec 8, 2021

Is this anything they've considered? 

Couldn't hurt to find out. Then you know what you qualify for when you do start looking. You should determine how you will be going about such a purchase. Using FHA could be a good way to go. As you only have to come up with 3.5% down. I'd do it as a owner occupied property. Also using FHA you can go up to a 4 unit building vs a single family. Hence, you could live in one and collect rent from 3.

oops would be $7,000 down...$200,000 x .035=$7,000

Well investors will sometimes have a home owner do a quit claim deed. Then assume the payments. Basically, until payment is received on the property you could effect your grandma if not paid on time. Sometimes it's considered a DIL-Deed in Lieu of Foreclosure. Investors may consider it a sandwich lease as well.

The hitch is grandma is on the hook until the cash is received to pay off the note she created. FHA is a good way to go for a low down payment unless your a vet. So it would be done as a purchase sale. With FHA it's 3.5% of purchase price down.

Example: 

Purchase Price $200,000 x .03%=$6,000 down payment 

200,000/360=$556 principal

200,000 x .04%=$8,000/12=$667 interest rate @ 4%

taxes 2,000/12=$167 

ins $2,000/12=$167

Total house payment $1,557 per month 

They will go from between 42 to 50% on your DTI-Debt to income ratio

The DTI is gathered from your secured assets- house, car, credit cards, student loans

A good FHA loan officer shouldn't have a hard time qualifying you if your earnings are easily verified and you have a good banking track record. They will want paycheck stubs and bank statements.

1. Generally, all property must be taxed based on its current market value. That’s the price it would sell for when both buyer and seller seek the best price and neither is under pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of “productivity values” for agricultural and timberland. This means that the land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.

https://gcad.org/frequently-as...

Google occasionally is our friend. 

Here's a good piece on it for you 

https://rockethq.com/learn/per...

While everyone has given you good advice I'd run from this deal. We all have our own way of doing things. My theology usually goes like this. 

$395,000/360=$1,097

$395,000 x.04=$15,800/12=$1,316

Total Output without insurance or expenses is $2,413 

Total income is $3,600 according to what you listed they are putting out the rest in whatever. 

Granted the payment would be less with more down. However, with these numbers there's no profit. It doesn't take it down enough from what I see to make it a win. You could always check out the difference on setting it up on a 15 year note. But I would still run with the repairs and next to no income and repairs.  In lieu of huge down payments that only protect one side I would suggest buying a US Treasury. They do some pretty unique things. Although, a lender doing this could be hard to find.  Although, the private side of a bank may help. 

The thing about the US Treasury is it insures the loan you take out against default. They can make them interest only loans. The treasury also helps avoid usual holding costs necessary to purchase a property. As your prepaying your principal up front at a discount with the treasury. So you literally end up with an interest only payment. The principal money usually put out to repay the created debt is satisficed upon maturity. Then you still have accumulated appreciation. Sometimes investors use both a letter of credit with the treasury to make a self liquidating loan. People talk about reverse mortgages being great. The treasury makes it better than a reverse mortgage on steroids income wise. Especially, with income producing properties. 

Found this for you 

https://www.avvo.com/legal-ans...

Wow sorry this isn't about what this thread was started for. I got distracted by the company Justin Phillips represents. The life changer loan sounds unique. Being in asset management and real estate since 1994 I'm quite impressed with the idea. I was also impressed with the profiles of the principal's of the company.  

I have an approved idea that is as unique that I would love some input on. The idea does some unique things. We call it the income creator. 

It insures created debt for less than 50%. 

It insures the life of the loan 

By insuring the principal up front with collateral enhancement you eliminate monthly principal payments as your insuring the balance up front. 

It also insures initial down payments necessary to purchase or invest in real estate

The idea creates an additional $40 million over the 30 years of the loan vs the way loans are currently done

The idea also makes any created debt triple A rated. 

it also eliminates some of the holding costs lenders want. As the collateral enhancement insures the debt against default.

If you ask me there is a lot of real estate over priced vs the income they bring in. While it's good to avoid any payments to buy anything many have to finance things to own anything in this life.  

Plus there is still accrued appreciation

I agree with Eric. People use this method not knowing how to break it down. Tell me what you want here's what I consider a good way to see if a property is worth going forward on 

850,000/360=$2361 PRIN

850,000X.05=$3,541 Interest

                    $6,750 Net Pymt not including insurance, repairs, or maintenance at $81,000 a year it's $845x12=$10,140. 

Granted you may get a better interest rate. However, even with a better interest rate there's next to nothing left! I'm just curious are you sure those are the right numbers? 20x$700 makes $168,000 gross a year before deductions. I know some places have low rent prices depending on where the property is located but less than $700 usually isn't found in todays rental world.