All Forum Posts by: Wes Brand

@Nick Romano 

Personally I prefer to estimate the repairs needed and the cost of those repairs and amortize them over the expected lifetime instead of setting aside a fixed %. Then it's a simple matter to zero out the appropriate columns (condo takes care of the roof? Great, 0 cost for getting a new roof) and adding in the condo fee.

All borrowers are going to have to go through the full underwriting process. If your credit would not qualify you for the loan they're not going to qualify you with your friend's credit.

Ah, my rule of thumb is off for 1 beds and studios -- I should have mentioned it only applies to 2-4beds. 

But again, it's just a quick "does the rent the place is getting make sense?" thing, not a detailed analysis. It's a starting point "they have a 2 bed renting for 800/mo. That's wrong, those should be in the 1400 range, why is it below market?" Or "they have a 2 bed listed as rented for 2500/mo, what's going on? (ski lease?)" Or as a quick way to look at the numbers and go "that's a 2 bed listed for 350k, it's (not?) going to make sense based on what I want to invest in because market is going to put it in the 1400/mo rental range"

I might need to tweak my numbers a bit for North Lake though, I'm more familiar with South Lake. New construction going up renting 2 beds for 1700 is definitely higher than my 0-area-research guess would put it at. But the 3 beds are spot on at the higher end.

What is your appreciation on the property like? How much equity do you have locked up in it vs what you paid, and do you need the cashflow? If it has appreciated nicely and you don't need the extra cashflow now I'd hang on to it.

I'm willing to bet that when you factor in the appreciation over the 11 years you've owned it you'll come out ahead vs 1k/mo in extra income, assuming you don't need the extra income to pay for something today.

Specifically it was rents expected of C-class areas, not A-class areas. You're not going to find (m)any C-class areas that close to the lake and ski resort. You will find long term 1-2bed rentals that rent for 700-1400/mo, which, for someone familiar with the bay area, is dirt cheap giving the impression that something is wrong. 

However, my point above was that vacancy is virtually nil, so one would expect rents to rise drastically to compensate for that. 

They don't; why not? 

(and my theory is the seasonal nature and the large percent of seasonal employees moving in who can't afford to pay more, so it doesn't matter that there are no vacancies, landlords can't charge more, but that's a guess...I don't know for sure)

That's where you'll have to talk to a loan officer for an answer. It will depend in your dad's income, debts, credit score, and the % you're putting down and the guidelines at the specific lending institution. 

Banks are going to be most happy when one person can cover the entire cost within their ratios (it's still possible to do with combined income, but they're going to give you a rougher time of it)

Banks typically look for Debt to income ratios of 36% or less due to regulations about which loans can be resold. If it's a portfolio loan you can mess with that a bit. If it's for investment purposes and you have a different primary residence banks will count the income from the property towards the DTI calculation.

So, based on your 42k/year number, you can probably convince a bank to lend you up to somewhere around 240k in mortgage debt(a bit lower because they're going to count taxes and insurance in the DTI number), assuming you have no other debts.

I remember those cabinets. 

If you have the time to DIY it, it's pretty cheap to get new cabinets from Ikea (A quick guestimate puts it at ~$1100 based on two 15" base cabs, one 30" base, and 4 30" wall cabs), and their butcher block countertop is dirt cheap(~$200for 74" sheet of solid oak)

You can also just replace all the doors; there are companies that will do that for you; If it's a standard size (and I imagine those are), you should be able to get replacement doors from home depot / lowes.

Unfortunately, because of the style of those doors you can't just put new pulls on them or repaint them. You're stuck replacing if you can't live with the style.

500-700 is for quick estimates / rule of thumb. There are definitely places that rent lower than that and if you're serious about it you'll need to do the research on the place to figure out why the rent is where it is and how you might be able to raise it. Sometimes it's mismanagement, lack of upgrades, or sometimes it's just that's what the market will support in that area. Too far from jobs/the lake/the grocery store/etc. 

The point above about married couples vs unmarried couples is that it's easy for one member of an unmarried couple to up and leave, leaving you holding the bag when the remaining member can't pay. Sure, you can go after them, if you can find them. And depending on how much rent you're talking about it may or may not be worth it. After all, they're outta there, so you're going after a person who already vacated your property for rent that was owed...it gets messy.