All Forum Posts by: Mark Whittlesey

Ask to her leave a plate of cookies and a glass of milk out when she goes to bed. Works for Santa Claus... Seems reasonable ghosts would go for it too.

One thing to remember about S8 is that it's a Federal program administered on the LOCAL level.  I have done S8 in 4 difference cities. One I would never, ever, EVERY do business with unless the entire staff turned over. Another did an inspection, re-inspection, tenant move-in and payment within 3 weeks. A third took 2 1/2 months to get me my first payment (though of course they did pay all the past rent that 3rd month and from then on everything went smoothly). So... YMMV depending on your local housing agency.

For me.. it would depend on what your plans are for the money and what your time frame is.. All the negatives already written about HELOCs are correct. Here is the positive that I like.. you can put money in and take money out at will. That isn't true (at least the 2nd part) with a mortgage. 

Summarizing.. I would say that the longer you plan to keep the property and "leave" the debt on it.. the more I would lean toward the mortgage.

I always prefer not to escrow when given the choice. It gives me better average cash flow. Also, the lender will keep a certain amount of cushion so it will cost  you more out of pocket overall.

Yes. I refinanced about 30 days ago. 5.75% for a NOO SFR .

This is your killer right here:

"So if 1 tenant is needed on each side per year, which I feel might be realistic for this property, thats $950 plus $1140,"

Buy  and hold does not work with that kind of turnover. 

Interesting that you just posted this as I just got this email from my realtor:

With home prices continuing to appreciate above historic levels, some are concerned that we may be heading for another housing ‘boom & bust.’ It is important to remember, however, that today’s market is quite different than the bubble market of twelve years ago.

Here are four key metrics that will explain why:

1.Home Prices

2.Mortgage Standards

3.Foreclosure Rates

4.Housing Affordability

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Last week, CoreLogic reported that,

“The inflation-adjusted U.S. median sale price in June 2006 was $247,110 (or $199,899 in 2006 dollars), compared with $213,400 in March 2018.” (This is the latest data available.)

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a monthly index which,

“…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Their July Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

A major cause of the housing crash last decade was the number of foreclosures that hit the market. They not only increased the supply of homes for sale but were also being sold at 20-50% discounts. Foreclosures helped drive down all home values.

Today, foreclosure numbers are lower than they were before the housing boom. Here are the number of consumers with new foreclosures according to the Federal Reserve’s most recent Household Debt and Credit Report:

2003: 203,320 (earliest reported numbers)

2009: 566,180 (at the valley of the crash)

Today: 76,480

Foreclosures today are less than 40% of what they were in 2003.

Contrary to many headlines, home affordability is better now than it was prior to the last housing boom. In the same article referenced in #1, CoreLogic revealed that in the vast majority of markets,“the inflation-adjusted, principal-and-interest mortgage payments that homebuyers have committed to this year remain much lower than their pre-crisis peaks.”

They went on to explain:

“The main reason the typical mortgage payment remains well below record levels in most of the country is that the average mortgage rate back in June 2006, when the U.S. typical mortgage payment peaked, was about 6.7 percent, compared with an average mortgage rate of about 4.4 percent in March 2018.”

The “price” of a home may be higher, but the “cost” is still below historic norms.

Bottom Line

After using these four key housing metrics to compare today to last decade, we can see that the current market is not anything like that bubble market

Yea.. The Phoenix market is pretty crazy right now. And I actually DO think that the seminars have been up and running lately. I always get a few postcards and letters offering to buy my property as-is, all cash, tenant in place ok, no realtor commission blah, blah.. Those contacts have at least tripled in 2018. And more and more Im getting PHONE calls (often somehow automated I think as some of them go directly to voice mail) and some of the calls are clearly foreign VA callers. I just tell them to write it up the contract in email and give them a price 10% over FMV. That usually ends the contact.

If you are looking for buy and hold I prefer Phoenix. I have been in both and got out of Vegas just in the nick of time before the recession. It was NOT a great rental market, mostly due to the transient nature of the population. I just found it much harder to keep long term tenants. If you are looking to buy, hold and re-sell then Vegas might be ok. I would guess you might get better appreciation there. But for the long term landlord, I would prefer Phoenix.

It's semi-standard. It is in roughly 1/2 the PMAs that I have seen. It's not my favorite PMA clause but far from the worst either. And yes.. as stated in this case, they get to do whatever the PMA says.. My current PMA also has this clause.