All Forum Posts by: Account Closed

@Account Closed

Do you vacation every weekend?

Frank

The short answer is yes. Usually around 10 loans. The way around it is once you have several loans you do a portfolio loan on them. 

If your buyer is getting some sort of investor friendly loan you may not have a problem. Homeowners that are getting conventional loans are more problematic for wholesaling. If you're doing an assignment, the buyer will typically need to pay your fee out of pocket and the lender will only use the original contract price when determining the "value" to use for the LTV calculation. If you're doing a double close the lender will do a title search and discover you (the seller) don't even own the house. That's a deal killer, too. If you want to try this, be very, very upfront with your buyer about what's happening and tell them they must be very open with their lender.

But, if you want to sell houses to retail homeowner buyers, just get your license and work as a buyer's agent.  Its the same job as a wholesaler.

On most residential mortgages (especially homeowner mortgages) the lender usually keeps funds held (i.e. in escrow) to pay the property taxes and insurance. (That's why you often see mortgage payments listed as "PITI", which means Principal, Interest, Taxes, and Insurance). This way the lender knows that the insurance is actually being paid, which is important from their perspective since they have a financial interest in the property! As others have noted, not all lenders require this.

When you are doing your analysis, just use the numbers you have for tax and insurance and include them in your expenses. They are part of your fixed costs, along with repairs, mgmt, utilities, cap ex, etc. (Since the amount you will pay for your debt service will vary a lot depending on your downpayment and interest rate you can't really consider that a fixed cost.) Take your gross income, subtract the fixed costs. That's your Net Operating Income. Then you can run different scenarios based on various loan term/downpayment parameters. In the end of course (once you buy the place), it doesn't matter whether the tax and insurance payments are made along with your mortgage payments or if you pay them yourself. They are still expenses that you deduct.

BTW, some mortgage calculators like the ones on the Zillow-type sites attempt to give you a "PITI" figure. Avoid those, use a calculator that just does principal and interest. Get the real tax and insurance numbers on your own to be sure they're right.

Is that what you were looking for?

Very simply put, it means to include them in your mortgage payment. Your lender pays them for you, then you pay them monthly to your lender.