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riverfun
10-01-2006, 12:37 PM
Ok, Ive been looking for a while now and I don't understand how some people do it. I can't find anything with 20% down and a fixed rate loan (I only do fixed rate on everything I own) that makes sense, I will still be upside down on the payment after taxes and insurance. I am limiting my search to 2-4 units (so I don't have to deal with a commercial prop. loan) and the general areas of where I live (Long Beach and surrounding area) or where I vacation (Needles, Mohave Valley, Bullhead etc.) Whats up? Do you guys know something I don't? Or are all investment properties being bought right now going backwards in relation to rental income vs. payment. I mean I keep looking and it seams I am better off leaving my down payment in the CD at 5.25%(although I know in 20 years when I want to retire the property would probably be the smarter move.)

catman-do
10-01-2006, 01:02 PM
There are lenders out there that offer loans on non-owner occ properties over 80% ltv. My company for example will go to 90% on 1-2 unit noo, 3-4 unit noo max'd at 85%. There are several other sub-prime companies that will go to 95% and even a efw "fly-by-night" lenders that will do 100% ltv on a noo. Now depending on how much you refi, or the proximity in which you plan on obtaining a loan and getting rid of a property would depend on what fixed duration you would want. If you refi ever few years why go fixed, you end up paying much more in the end and financially doesnt make sense. On noo properties I would go with a 5/25 and have no prepay just incase the thing ends up being too much hassle to own. Then you dump it, sacrifice as much losses and possible and walk away without having 15k+ in prepay penalties.
just my .02

soupersonic
10-01-2006, 01:04 PM
Thats the way it has been for a while now.Everything is overpriced for the income it generates.I suggest you look in another state.

4DAY4PLAY
10-01-2006, 01:11 PM
Whats the rush??? the bubble just burst, give it a year, save some more $$$ and you'll have 30% to put down between savings, interest from CD's and lower property values, then you'll be in positive cash flow. Thats my plan anyways...this time next year liquid $$$ will be priceless.

Ivan Dan
10-01-2006, 01:11 PM
There are lenders out there that offer loans on non-owner occ properties over 80% ltv. My company for example will go to 90% on 1-2 unit noo, 3-4 unit noo max'd at 85%. There are several other sub-prime companies that will go to 95% and even a efw "fly-by-night" lenders that will do 100% ltv on a noo. Now depending on how much you refi, or the proximity in which you plan on obtaining a loan and getting rid of a property would depend on what fixed duration you would want. If you refi ever few years why go fixed, you end up paying much more in the end and financially doesnt make sense. On noo properties I would go with a 5/25 and have no prepay just incase the thing ends up being too much hassle to own. Then you dump it, sacrifice as much losses and possible and walk away without having 15k+ in prepay penalties.
just my .02
On the apartment I own I did a Option Arm fixed for 1 year because I wasn't sure how things would work out owning a rental in Apple Valley. I also made sure was no pre-payment penalty so in case I decided it was too much of a head ache I could sell it. This is exactly what happened to me, the place ended up being WAY more hassle than it was worth because of the location. I decided after owning it for only 1 year and 3 months that Apple Valley isn't a desired location for a rental property (atleast for me). I will admit that I have made a pretty decent $$ in appreciation but still don't know if it was worth the headache.
Ok, Ive been looking for a while now and I don't understand how some people do it. I can't find anything with 20% down and a fixed rate loan (I only do fixed rate on everything I own) that makes sense, I will still be upside down on the payment after taxes and insurance. I am limiting my search to 2-4 units (so I don't have to deal with a commercial prop. loan) and the general areas of where I live (Long Beach and surrounding area) or where I vacation (Needles, Mohave Valley, Bullhead etc.) Whats up? Do you guys know something I don't? Or are all investment properties being bought right now going backwards in relation to rental income vs. payment. I mean I keep looking and it seams I am better off leaving my down payment in the CD at 5.25%(although I know in 20 years when I want to retire the property would probably be the smarter move.)
If I can help with any questions or anything feel free to PM or e-mail (Dan@DanKaatz.com) me.

soupersonic
10-01-2006, 01:11 PM
There are lenders out there that offer loans on non-owner occ properties over 80% ltv. My company for example will go to 90% on 1-2 unit noo, 3-4 unit noo max'd at 85%. There are several other sub-prime companies that will go to 95% and even a efw "fly-by-night" lenders that will do 100% ltv on a noo. Now depending on how much you refi, or the proximity in which you plan on obtaining a loan and getting rid of a property would depend on what fixed duration you would want. If you refi ever few years why go fixed, you end up paying much more in the end and financially doesnt make sense. On noo properties I would go with a 5/25 and have no prepay just incase the thing ends up being too much hassle to own. Then you dump it, sacrifice as much losses and possible and walk away without having 15k+ in prepay penalties.
just my .02
The properties are already overpriced/upside down or w/e you choose to call it.He is talking about putting 20% down and it doesnt make finacial sense so they are sitting on the market forever. How would putting less down help? Higher payment and less income? :rolleyes:

catman-do
10-01-2006, 01:27 PM
The properties are already overpriced/upside down or w/e you choose to call it.He is talking about putting 20% down and it doesnt make finacial sense so they are sitting on the market forever. How would putting less down help? Higher payment and less income? :rolleyes:
The reason for me putting the lesser down payment option is because the comment he made about leaving the money in a CD with a higher yield. If he would like to go that route he would still be able to and own a property. In very few markets will you be able to buy an investment property and make monthly gains on it in the beginning. Only in the past few years have people actually done that, in which this market has been crazy and any "joe" could come in and play mr r/e investor. Any property we've been invested in (with the exception of 1999-2004) we have never made money in the beginning. Its always after the market has had its chance to rise and rents get higher in which you can then increase your rents to a point in which you may break even or profit. However when I buy investment property its not to make money on the rents. Its to make money on the appreciation of the property. The last property we had was units in victim-ville and we tore the place down after renting the units and rebuilt as 3 sfr's. It was more profitable as far as the land is concerned as a sfr than as units. I dont see much profit being made right now in the used speculator market, however we are still entertaining the thought of building new sfr's on land that is already owned.

riverfun
10-01-2006, 01:30 PM
I am looking to own for the long term. I am very and I mean very conservative in my life in regards to money, that is why I would most probably only consider a fixed rate loan. Also I know that income property can be a headache at times as I do own 1 now (a condo) that I have had for several years.

riverfun
10-01-2006, 01:34 PM
I know I wont see a profit on rents in the beginning but Im looking at 80 to 130 down and still seeing 1000.00 to 2000.00 negitive monthy flow.

Mandelon
10-01-2006, 01:48 PM
Times have changed. When rental units were $30,000 a door you could do what you are talking about. When prices rose, they deals no longer made sense, at least around here. What kind of investment is it, if the prospect for appreciation is iffy at best, and it costs you a negative every month? Sounds like a boat....LOL. The stock market is going to be the place to invest for the next 5 years at least. When stocks crapped out money went into realty, now its going to flow back again. The news isn't playing it up much since they are Bush haters.....
Face it real estate is heading into the shitter and that's not going to change for a while. We are just on the beginning of a downhill slide. The boomers are going to be retiring with no savings....except for the equity in their homes, which they will be trying to sell. Lots of them for the next 20 years...too much housing = lower prices. Lowering interest rates might help, but not enough. The period of "irrational exuberance" is over. Keep saving your money.
The dow is bumping new highs, and that likely to continue with a few inevitable pullbacks. Save up enough money to pay a higher down to get positive cashflow. Let the tenants pay off the mortgage. But don't count on much appreciation to help the equation. Only if you buy a fixer or poorly managed property will you be able to make big gains.
Pick an area that will be a retirement destination, somewhere affordable and desireable that the rust belt retirees will pick. Social Security won't help them much, they'll need to live cheap, near decent medical care.......

soupersonic
10-01-2006, 01:50 PM
I sent you a pm mandelon

soupersonic
10-01-2006, 01:52 PM
Times have changed. When rental units were $30,000 a door you could do what you are talking about. When prices rose, they deals no longer made sense, at least around here. What kind of investment is it, if the prospect for appreciation is iffy at best, and it costs you a negative every month? Sounds like a boat....LOL. The stock market is going to be the place to invest for the next 5 years at least. When stocks crapped out money went into realty, now its going to flow back again. The news isn't playing it up much since they are Bush haters.....
Face it real estate is heading into the shitter and that's not going to change for a while. We are just on the beginning of a downhill slide. The boomers are going to be retiring with no savings....except for the equity in their homes, which they will be trying to sell. Lots of them for the next 20 years...too much housing = lower prices. Lowering interest rates might help, but not enough. The period of "irrational exuberance" is over. Keep saving your money.
The dow is bumping new highs, and that likely to continue with a few inevitable pullbacks. Save up enough money to pay a higher down to get positive cashflow. Let the tenants pay off the mortgage. But don't count on much appreciation to help the equation. Only if you buy a fixer or poorly managed property will you be able to make big gains.
Pick an area that will be a retirement destination, somewhere affordable and desireable that the rust belt retirees will pick. Social Security won't help them much, they'll need to live cheap, near decent medical care.......
That pretty much sums it up.

4DAY4PLAY
10-01-2006, 02:10 PM
I am looking to own for the long term. I am very and I mean very conservative in my life in regards to money, that is why I would most probably only consider a fixed rate loan. Also I know that income property can be a headache at times as I do own 1 now (a condo) that I have had for several years.
If your are very very conservative, maybe buying a rental property isnt for you...theres actually more risk than people think. Conservative would be putting yor $$$ in a CD and make 5-7% on it. Any real estate purchased right now will probably not go up 5% in value the next year or two, in fact try negative 5-10% the next two years.

bchbum
10-01-2006, 07:22 PM
I have a group of 3 that wants to buy a fixer , we're all trades people with a good sum of $ in the bank . How far below market should we be looking for ? not looking for a tear- down ,just the basics & flip or rent . :crossx:

BoatPI
10-02-2006, 05:22 AM
I have owned residental income property for years. And like u discovered owning near where u live is best. Long Beach is a great place to invest, and lenders will do 80% LTV if you have significant assets and FICA of 750 or so (with a good rate not 9%).
LB has good income areas to support the prices, but the place needs to be at the top of the rent scale and in excellent condition to make it work. I might suggest looking in the Washington School area, and for a place that has some yard space and garages. This area is zoned high density, so u can have about 1 unit per 1,500 feet of lot and build up to 36'. Both add at least $200 per month to the rent. Prices do need to soften a bit, but you should soon see properties for about 13-14 Gm again.

Sportin' Wood
10-02-2006, 06:00 AM
I read a report last Thursday that 1 out of every 400 homes in Colorado are currently in forclosure. Maybe there is some potential there. I'm with Mandy wait about 6-9 months. All my research points toward a a gradual rebound by ( leveling out might be better) 3rd quarter 2007. I have said it before, senior housing looks like a safe bet.
Disclaimer: I'm a hack with little knowledge :)

lalhc
10-02-2006, 06:12 AM
riverfun - I am selling a duplex in La Verne for $629K, which can generate $3K per month in rent. I can help save more (closing costs) by carrying a fixed term loan. PM me w/your contact # if you're interested.

Mandelon
10-02-2006, 08:02 AM
I have a group of 3 that wants to buy a fixer , we're all trades people with a good sum of $ in the bank . How far below market should we be looking for ? not looking for a tear- down ,just the basics & flip or rent . :crossx:
To make money, with the three of you, what is the minimum you want to take a chance on? $10,000 each? Its almost tougher with partners. You spread the risk, but have to share the reward. I won't do one unless I can conservatively make $25,000.
Say an average home sells for $400,000. You will have selling and carrying costs. I use 10% for that figure. Title insurance on both ends, although you can buy a binder and save a little on the sales end. Commission, escrow, insurance, all that stuff. Interest payments... It adds up.
Rehab costs, maybe $10 to $50 per square foot depending on what you are doing. Basic paint and carpet or granite and stone witih new cabinets. We'll pick $25 a foot for our example here...on a 1500 sq ft housethat runs $37,500. That ought to get you two new bathrooms, and a decent kitchen.
Add it up $37,500 rehab
$40,000 hold and sell cost
$25,000 minum profit
That means that you need to buy $102,500 under market. This assumes a flat market. In a declining market you need to be in front of the prices dropping. Once things start to turn around will be the best time. Any idiot can money in real estate in a rising market. Now we will find out who is any good.
Last time I was picking up home for $50K and $60K grand and selling them for $110K and $120K....thought I was so smart.....they are all at $300K $400K now :rolleyes: ...you make more money by buying and holding over the long term than you do by flipping.
Find a hungry agent and start shooting out lowball offers on what they call "don't wanters". Homes owned by people who don't want them....

Boozer
10-02-2006, 09:19 AM
If you are looking to invest in real estate I can get you information on a relatively new program that has not once lost a single investor a dollar. Obviously there are risks associated with any investment and even this program isn't gaurunteed, however to date it has done a lot of people very well including myself.