Comments on: How To Analyze A Killer Real Estate Deal http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/ How to Quit Your Job and Start Your Own Business Fri, 22 Aug 2008 02:42:03 +0000 http://wordpress.org/?v=2.2 By: Bath box http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-1024 Bath box Tue, 05 Feb 2008 00:40:51 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-1024 <strong>Bath box...</strong> Great, hard hitting letter.... Bath box…

Great, hard hitting letter….

]]> By: Brian Armstrong http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-809 Brian Armstrong Wed, 31 Oct 2007 03:47:16 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-809 For those waiting to see how this deal turned out, please check out my follow up post. Thanks! http://www.startbreakingfree.com/200/ For those waiting to see how this deal turned out, please check out my follow up post. Thanks!
http://www.startbreakingfree.com/200/

]]> By: How I Made A 113% Return In One Month With Real Estate http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-808 How I Made A 113% Return In One Month With Real Estate Wed, 31 Oct 2007 03:46:11 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-808 [...] is a follow up to my previous article on How To Analyze A Killer Real Estate Deal, where I show you an actual property I looked at and purchased. The property is now rehabbed, [...] […] is a follow up to my previous article on How To Analyze A Killer Real Estate Deal, where I show you an actual property I looked at and purchased. The property is now rehabbed, […]

]]> By: Helen Yu http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-758 Helen Yu Fri, 21 Sep 2007 17:32:48 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-758 Just checked Fannie Mae guidelines (they are really the only entity buying loans right now), they will allow new appraisal value for LTV calculation, but unless your Debt-To-Income ratio can qualify with full income documentation (complete tax returns or W2's and paystubs if wage earner) a "stated income" loan will require minimum 720 fico score to go to 90% LTV and will require Mortgage Insurance if LTV exceeds 80%. "Stated" income doc type will also require cash reserves (seasoned in your account for > 60 days) in the amount of 4 X monthly income as stated or 6 months of PITI overhead, whichever is higher. Assuming you "state" $5,000 monthly income for the loan to fit into your debt-to-income ratio, you will have to document $20,000 in seasoned cash reserves. I hope you can fit these guidelines. Good luck! Just checked Fannie Mae guidelines (they are really the only entity buying loans right now), they will allow new appraisal value for LTV calculation, but unless your Debt-To-Income ratio can qualify with full income documentation (complete tax returns or W2’s and paystubs if wage earner) a “stated income” loan will require minimum 720 fico score to go to 90% LTV and will require Mortgage Insurance if LTV exceeds 80%. “Stated” income doc type will also require cash reserves (seasoned in your account for > 60 days) in the amount of 4 X monthly income as stated or 6 months of PITI overhead, whichever is higher. Assuming you “state” $5,000 monthly income for the loan to fit into your debt-to-income ratio, you will have to document $20,000 in seasoned cash reserves. I hope you can fit these guidelines. Good luck!

]]> By: Helen Yu http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-757 Helen Yu Fri, 21 Sep 2007 07:34:53 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-757 Rental market is strong since 100% stated income financing is gone and fewer buyers can qualify to purchase. The bigger challenge will be getting it refinanced out of the hard money loan to which you have committed for the purchase money. You could find yourself having to maintian that high interest private money loan for as long as 6 months to a year before a lender will grant a new conventional loan based on new appraisal value (and for new appraisal value to be high enough to absorb the $92,800 you borrowed initially.) Hopefully, it all works out, but as previous poster said, up to now rampant appreciation and lenient lending guidelines have mitigated a lot of the potential risks in real estate speculation, but those days are gone and the exposure can be high. Rental market is strong since 100% stated income financing is gone and fewer buyers can qualify to purchase. The bigger challenge will be getting it refinanced out of the hard money loan to which you have committed for the purchase money. You could find yourself having to maintian that high interest private money loan for as long as 6 months to a year before a lender will grant a new conventional loan based on new appraisal value (and for new appraisal value to be high enough to absorb the $92,800 you borrowed initially.) Hopefully, it all works out, but as previous poster said, up to now rampant appreciation and lenient lending guidelines have mitigated a lot of the potential risks in real estate speculation, but those days are gone and the exposure can be high.

]]> By: Brian Armstrong http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-756 Brian Armstrong Fri, 21 Sep 2007 06:02:20 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-756 Hi Helen, thank you for the comments...I will post a follow up once it is rehabbed and rented. Hopefully it works out as planned! Hi Helen, thank you for the comments…I will post a follow up once it is rehabbed and rented. Hopefully it works out as planned!

]]> By: Helen Yu http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-755 Helen Yu Fri, 21 Sep 2007 05:46:20 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-755 Fannie/Freddie and FHA actually have full doc versions of this loan which is essentially a small construction to perm loan funded in one step, but they would require full income documentation with strict debt to income and general contractor qualifications... This would be a much safer approach, but very arduous to qualify. I wish you lots of luck in your investment endeavors. The risk in the current declining R.E. market is that by the time an investor has completed the rehab 30 to 60 days later to pursue a refiance out of the hard money purchase loan, the property value as predicted by the initial appraisal may no longer be substantiated with new more current comparable sales and one may end up unable to refinance out of that hard money loan because the loan to new comparable value may now exceed the pevious 80%. An investor could find themselves stuck carrying the property at the 12-15% hard money rate and suddenly the negative cash flow can drive it into foreclosure in a very short time. Also need to consider that in light of the recent global lending crisis, lenders now have ever tightening requirements on ownership title/value seasoning. Property value will be calculated based on purchase price + documentable cost of improvements and the maximum loan-to-value to refinance will be calculated from that, not an inflated new appraisal when qualifying for your refinance. May be doable if you have 10-20% to bring in, not necessarily a $0 down deal in this market. Best of luck to you in this tough market. Fannie/Freddie and FHA actually have full doc versions of this loan which is essentially a small construction to perm loan funded in one step, but they would require full income documentation with strict debt to income and general contractor qualifications… This would be a much safer approach, but very arduous to qualify. I wish you lots of luck in your investment endeavors. The risk in the current declining R.E. market is that by the time an investor has completed the rehab 30 to 60 days later to pursue a refiance out of the hard money purchase loan, the property value as predicted by the initial appraisal may no longer be substantiated with new more current comparable sales and one may end up unable to refinance out of that hard money loan because the loan to new comparable value may now exceed the pevious 80%. An investor could find themselves stuck carrying the property at the 12-15% hard money rate and suddenly the negative cash flow can drive it into foreclosure in a very short time. Also need to consider that in light of the recent global lending crisis, lenders now have ever tightening requirements on ownership title/value seasoning. Property value will be calculated based on purchase price + documentable cost of improvements and the maximum loan-to-value to refinance will be calculated from that, not an inflated new appraisal when qualifying for your refinance. May be doable if you have 10-20% to bring in, not necessarily a $0 down deal in this market. Best of luck to you in this tough market.

]]> By: Brian Armstrong http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-754 Brian Armstrong Fri, 21 Sep 2007 05:14:00 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-754 Helen please know that I don't mean any disrespect by this, but that is simply not true. I know because I've just done it: 80% of the after repair value, stated income, refinancing in 30 days. I think this type of loan is pretty rare right now but I've seen similar programs designed for investors from a few companies so they are not impossible to find. Keep in mind that it is hard money during the 30 day rehab period, then refinacing into something permanent. It's not a cash out refi. Helen please know that I don’t mean any disrespect by this, but that is simply not true. I know because I’ve just done it: 80% of the after repair value, stated income, refinancing in 30 days. I think this type of loan is pretty rare right now but I’ve seen similar programs designed for investors from a few companies so they are not impossible to find. Keep in mind that it is hard money during the 30 day rehab period, then refinacing into something permanent. It’s not a cash out refi.

]]> By: Helen Yu http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-753 Helen Yu Fri, 21 Sep 2007 00:51:13 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-753 I have been in the lending business since the early '90's. There are a few inaccuracies with the scenario you have posed: 1) Lenders across the board will calculate the maximum loan-to-vlaue on the LOWER of the actual purchase price OR the appraisal value. No lender will loan 80% of the projected value after reapirs which by your estimation is $92,800 loan amount = $16,800 more than the actual cost of the property. 2) 100% financing (based on purchase price of $76,000) is only available on a full income documentation owner occupied primary residence, not a non-owner occupied investment property. 3) 12 months ownership and value seasoning is required on any cashout transaction and with the current lending crisis, loan-to-value will be very, very low, particularly if the property is an investment, not owner occ. I have been in the lending business since the early ’90’s. There are a few inaccuracies with the scenario you have posed:

1) Lenders across the board will calculate the maximum loan-to-vlaue on the LOWER of the actual purchase price OR the appraisal value. No lender will loan 80% of the projected value after reapirs which by your estimation is $92,800 loan amount = $16,800 more than the actual cost of the property.

2) 100% financing (based on purchase price of $76,000) is only available on a full income documentation owner occupied primary residence, not a non-owner occupied investment property.

3) 12 months ownership and value seasoning is required on any cashout transaction and with the current lending crisis, loan-to-value will be very, very low, particularly if the property is an investment, not owner occ.

]]> By: Brian Armstrong http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-715 Brian Armstrong Mon, 10 Sep 2007 21:26:03 +0000 http://www.startbreakingfree.com/162/how-to-analyze-a-killer-real-estate-deal/#comment-715 I'm not planning to do a refi on this property, but to answer your question yes it is still possible. Thanks! Brian I’m not planning to do a refi on this property, but to answer your question yes it is still possible. Thanks!
Brian

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