Smart Strategy For Purchasing a House?

[Omega Point]

Thanks for all your replies.

We are likely to buy in Rancho Bernardo – 4S Ranch.

SD Realtor – I like your suggestion of plotting this out. I will do so and if possible post the results.

Finally, although I know CA is non-recourse, I could not, in good cconscience, walk away from the home when I have the means to continue making payments. For me, that is what is wrong with our country right now, everyone is a victim and wants something for nothing.

[bake]

sd reator, aren’t prices getting close to that level, when you consider the tax deduction and principal reduction, as i said in a recent post, as follows..

“scaredycat, the fundamentals suggest there is still some downside in the san diego market, but if you are sure you want to live there for 10-20 years, and you find a home you really love, go ahead and buy it if your monthly payment on the purchase would be close to what you could rent it for, for example: purchase price 400k, loan amount 400k @ 7%, payment is 2646 plus 480 tax and insur for a total of 3126. say you can write off 30% for a net payment of 2188; if this home would rent for that much, i would say it will be a good investment.”

sd realtor don’t forget on a loan of 400k fully amortized 30/30 you have a principal reduction of about 320 on your first payment also, wouldn’t a 400k house usually rent for 2000 p/mo?

[bake]

sd reator, aren’t prices getting close to that level, when you consider the tax deduction and principal reduction, as i said in a recent post, as follows..

“scaredycat, the fundamentals suggest there is still some downside in the san diego market, but if you are sure you want to live there for 10-20 years, and you find a home you really love, go ahead and buy it if your monthly payment on the purchase would be close to what you could rent it for, for example: purchase price 400k, loan amount 400k @ 7%, payment is 2646 plus 480 tax and insur for a total of 3126. say you can write off 30% for a net payment of 2188; if this home would rent for that much, i would say it will be a good investment.”

sd realtor don’t forget on a loan of 400k fully amortized 30/30 you have a principal reduction of about 320 on your first payment also, wouldn’t a 400k house usually rent for 2000 p/mo?

[bake]

sd reator, aren’t prices getting close to that level, when you consider the tax deduction and principal reduction, as i said in a recent post, as follows..

“scaredycat, the fundamentals suggest there is still some downside in the san diego market, but if you are sure you want to live there for 10-20 years, and you find a home you really love, go ahead and buy it if your monthly payment on the purchase would be close to what you could rent it for, for example: purchase price 400k, loan amount 400k @ 7%, payment is 2646 plus 480 tax and insur for a total of 3126. say you can write off 30% for a net payment of 2188; if this home would rent for that much, i would say it will be a good investment.”

sd realtor don’t forget on a loan of 400k fully amortized 30/30 you have a principal reduction of about 320 on your first payment also, wouldn’t a 400k house usually rent for 2000 p/mo?

[bake]

sd reator, aren’t prices getting close to that level, when you consider the tax deduction and principal reduction, as i said in a recent post, as follows..

“scaredycat, the fundamentals suggest there is still some downside in the san diego market, but if you are sure you want to live there for 10-20 years, and you find a home you really love, go ahead and buy it if your monthly payment on the purchase would be close to what you could rent it for, for example: purchase price 400k, loan amount 400k @ 7%, payment is 2646 plus 480 tax and insur for a total of 3126. say you can write off 30% for a net payment of 2188; if this home would rent for that much, i would say it will be a good investment.”

sd realtor don’t forget on a loan of 400k fully amortized 30/30 you have a principal reduction of about 320 on your first payment also, wouldn’t a 400k house usually rent for 2000 p/mo?

[bake]

sd reator, aren’t prices getting close to that level, when you consider the tax deduction and principal reduction, as i said in a recent post, as follows..

“scaredycat, the fundamentals suggest there is still some downside in the san diego market, but if you are sure you want to live there for 10-20 years, and you find a home you really love, go ahead and buy it if your monthly payment on the purchase would be close to what you could rent it for, for example: purchase price 400k, loan amount 400k @ 7%, payment is 2646 plus 480 tax and insur for a total of 3126. say you can write off 30% for a net payment of 2188; if this home would rent for that much, i would say it will be a good investment.”

sd realtor don’t forget on a loan of 400k fully amortized 30/30 you have a principal reduction of about 320 on your first payment also, wouldn’t a 400k house usually rent for 2000 p/mo?

[urbanrealtor]

[quote=SD Realtor]”just make sure you don’t overpay for the house; your monthly payment with 97 – 100% financing, after the write off, should be close to what the property would rent for…”

There’s the rub. Depending on where you want to live there is little to no chance at all that you will finance 97% of the home and your payment will match the rent. If you are going to set that as a parameter then you more then likely will be waiting a long long time at best. [/quote]

No.

Everything I am handling right now is using FHA loans where the loan to value is 96% or more.

Also, several of the neighborhoods I am handling have cap rates (that’s net income over purchase price) of about 8-10%. You are right that this is more rare with houses.

EG: Several properties in North Park or Normal Heights are worth 120-140k. They net rent for 1000/mth or 12000/year. Playing cards right could mean positive cash flow with 4000k of skin in the deal. It means mortgage and combined monthly costs lower than rent.

[urbanrealtor]

[quote=SD Realtor]”just make sure you don’t overpay for the house; your monthly payment with 97 – 100% financing, after the write off, should be close to what the property would rent for…”

There’s the rub. Depending on where you want to live there is little to no chance at all that you will finance 97% of the home and your payment will match the rent. If you are going to set that as a parameter then you more then likely will be waiting a long long time at best. [/quote]

No.

Everything I am handling right now is using FHA loans where the loan to value is 96% or more.

Also, several of the neighborhoods I am handling have cap rates (that’s net income over purchase price) of about 8-10%. You are right that this is more rare with houses.

EG: Several properties in North Park or Normal Heights are worth 120-140k. They net rent for 1000/mth or 12000/year. Playing cards right could mean positive cash flow with 4000k of skin in the deal. It means mortgage and combined monthly costs lower than rent.

[urbanrealtor]

[quote=SD Realtor]”just make sure you don’t overpay for the house; your monthly payment with 97 – 100% financing, after the write off, should be close to what the property would rent for…”

There’s the rub. Depending on where you want to live there is little to no chance at all that you will finance 97% of the home and your payment will match the rent. If you are going to set that as a parameter then you more then likely will be waiting a long long time at best. [/quote]

No.

Everything I am handling right now is using FHA loans where the loan to value is 96% or more.

Also, several of the neighborhoods I am handling have cap rates (that’s net income over purchase price) of about 8-10%. You are right that this is more rare with houses.

EG: Several properties in North Park or Normal Heights are worth 120-140k. They net rent for 1000/mth or 12000/year. Playing cards right could mean positive cash flow with 4000k of skin in the deal. It means mortgage and combined monthly costs lower than rent.

[urbanrealtor]

[quote=SD Realtor]”just make sure you don’t overpay for the house; your monthly payment with 97 – 100% financing, after the write off, should be close to what the property would rent for…”

There’s the rub. Depending on where you want to live there is little to no chance at all that you will finance 97% of the home and your payment will match the rent. If you are going to set that as a parameter then you more then likely will be waiting a long long time at best. [/quote]

No.

Everything I am handling right now is using FHA loans where the loan to value is 96% or more.

Also, several of the neighborhoods I am handling have cap rates (that’s net income over purchase price) of about 8-10%. You are right that this is more rare with houses.

EG: Several properties in North Park or Normal Heights are worth 120-140k. They net rent for 1000/mth or 12000/year. Playing cards right could mean positive cash flow with 4000k of skin in the deal. It means mortgage and combined monthly costs lower than rent.

[urbanrealtor]

[quote=SD Realtor]”just make sure you don’t overpay for the house; your monthly payment with 97 – 100% financing, after the write off, should be close to what the property would rent for…”

There’s the rub. Depending on where you want to live there is little to no chance at all that you will finance 97% of the home and your payment will match the rent. If you are going to set that as a parameter then you more then likely will be waiting a long long time at best. [/quote]

No.

Everything I am handling right now is using FHA loans where the loan to value is 96% or more.

Also, several of the neighborhoods I am handling have cap rates (that’s net income over purchase price) of about 8-10%. You are right that this is more rare with houses.

EG: Several properties in North Park or Normal Heights are worth 120-140k. They net rent for 1000/mth or 12000/year. Playing cards right could mean positive cash flow with 4000k of skin in the deal. It means mortgage and combined monthly costs lower than rent.

[SD Realtor]

My reference was for neighborhoods such as Carmel Valley, 4S Ranch, Encinitas, and for homes in a 2500 sf range. Somethign where many people I work with who are looking for a place to live that is commuter close and decent school districts. No way I see an FHA based mortgage payment on a 97% financed loan approaching a rent payment in these neighborhoods. Now if you want to use other neighborhoods as an example then yes there is an opportunity.

Now I also have two friends who have FHA loans and have had an inspector come to the house to make sure they live there. So if you are planning on using an FHA loan and not being honest about primary occupancy of the home, that is your risk to make.

As for creating the spreadhseet to determine the analysis correctly you should take a few different loan scenarios and plot them out over say 20 years. Do the same thing with your projected investment of the unused downpayment money to see what kind of return you get. Your assumptions on the return you will make is the biggest unknown here, not just what the return will be but for instance when will the high interest rate environment become a reality. So this portion of the estimations will be challenging but useful.

lonestar yes for certain homes/condos in certain areas and yes considering the write off, there are some areas getting close. Again, my reference (and sorry for not stating clearly) was for neighborhoods that are not close yet. Also again, and you can correct me on this, FHA loans are for owner occupied housing. So anyone eluding to grabbing an FHA loan and converting they property to a rental is essentially committing fraud.

[SD Realtor]

My reference was for neighborhoods such as Carmel Valley, 4S Ranch, Encinitas, and for homes in a 2500 sf range. Somethign where many people I work with who are looking for a place to live that is commuter close and decent school districts. No way I see an FHA based mortgage payment on a 97% financed loan approaching a rent payment in these neighborhoods. Now if you want to use other neighborhoods as an example then yes there is an opportunity.

Now I also have two friends who have FHA loans and have had an inspector come to the house to make sure they live there. So if you are planning on using an FHA loan and not being honest about primary occupancy of the home, that is your risk to make.

As for creating the spreadhseet to determine the analysis correctly you should take a few different loan scenarios and plot them out over say 20 years. Do the same thing with your projected investment of the unused downpayment money to see what kind of return you get. Your assumptions on the return you will make is the biggest unknown here, not just what the return will be but for instance when will the high interest rate environment become a reality. So this portion of the estimations will be challenging but useful.

lonestar yes for certain homes/condos in certain areas and yes considering the write off, there are some areas getting close. Again, my reference (and sorry for not stating clearly) was for neighborhoods that are not close yet. Also again, and you can correct me on this, FHA loans are for owner occupied housing. So anyone eluding to grabbing an FHA loan and converting they property to a rental is essentially committing fraud.

[SD Realtor]

My reference was for neighborhoods such as Carmel Valley, 4S Ranch, Encinitas, and for homes in a 2500 sf range. Somethign where many people I work with who are looking for a place to live that is commuter close and decent school districts. No way I see an FHA based mortgage payment on a 97% financed loan approaching a rent payment in these neighborhoods. Now if you want to use other neighborhoods as an example then yes there is an opportunity.

Now I also have two friends who have FHA loans and have had an inspector come to the house to make sure they live there. So if you are planning on using an FHA loan and not being honest about primary occupancy of the home, that is your risk to make.

As for creating the spreadhseet to determine the analysis correctly you should take a few different loan scenarios and plot them out over say 20 years. Do the same thing with your projected investment of the unused downpayment money to see what kind of return you get. Your assumptions on the return you will make is the biggest unknown here, not just what the return will be but for instance when will the high interest rate environment become a reality. So this portion of the estimations will be challenging but useful.

lonestar yes for certain homes/condos in certain areas and yes considering the write off, there are some areas getting close. Again, my reference (and sorry for not stating clearly) was for neighborhoods that are not close yet. Also again, and you can correct me on this, FHA loans are for owner occupied housing. So anyone eluding to grabbing an FHA loan and converting they property to a rental is essentially committing fraud.

[SD Realtor]

My reference was for neighborhoods such as Carmel Valley, 4S Ranch, Encinitas, and for homes in a 2500 sf range. Somethign where many people I work with who are looking for a place to live that is commuter close and decent school districts. No way I see an FHA based mortgage payment on a 97% financed loan approaching a rent payment in these neighborhoods. Now if you want to use other neighborhoods as an example then yes there is an opportunity.

Now I also have two friends who have FHA loans and have had an inspector come to the house to make sure they live there. So if you are planning on using an FHA loan and not being honest about primary occupancy of the home, that is your risk to make.

As for creating the spreadhseet to determine the analysis correctly you should take a few different loan scenarios and plot them out over say 20 years. Do the same thing with your projected investment of the unused downpayment money to see what kind of return you get. Your assumptions on the return you will make is the biggest unknown here, not just what the return will be but for instance when will the high interest rate environment become a reality. So this portion of the estimations will be challenging but useful.

lonestar yes for certain homes/condos in certain areas and yes considering the write off, there are some areas getting close. Again, my reference (and sorry for not stating clearly) was for neighborhoods that are not close yet. Also again, and you can correct me on this, FHA loans are for owner occupied housing. So anyone eluding to grabbing an FHA loan and converting they property to a rental is essentially committing fraud.

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