Smart Strategy For Purchasing a House?

[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.

[EconProf]

Urbanrealtor: Several houses in North Park and Normal Heights for $120k to $140k that will rent for $1000 a month?
I know that area well and I doubt it.
Examples please?

[EconProf]

Urbanrealtor: Several houses in North Park and Normal Heights for $120k to $140k that will rent for $1000 a month?
I know that area well and I doubt it.
Examples please?

[EconProf]

Urbanrealtor: Several houses in North Park and Normal Heights for $120k to $140k that will rent for $1000 a month?
I know that area well and I doubt it.
Examples please?

[EconProf]

Urbanrealtor: Several houses in North Park and Normal Heights for $120k to $140k that will rent for $1000 a month?
I know that area well and I doubt it.
Examples please?

[EconProf]

Urbanrealtor: Several houses in North Park and Normal Heights for $120k to $140k that will rent for $1000 a month?
I know that area well and I doubt it.
Examples please?

[SD Realtor]

Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes

[SD Realtor]

Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes

[SD Realtor]

Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes

[SD Realtor]

Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes

[SD Realtor]

Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes

[urbanrealtor]

[quote=SD Realtor]Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes[/quote]

Thats right.
I would also expand the zip to92116 and some very select parts of 92102 (though that is really more like south park).
I am sure of the rental rates because recently, I have been engaged to assist buyer in getting them rented.

Like I said that type of equation is harder to match in houses but here are some examples

Here is a conversion project that fell apart halfway through (its at 35th and Meade):
The cheapest 1 bedroom closed at 52k
080042852
The cheapest 2br closed at 80k
086017289
There were about 30 units in this complex that closed at similar prices.

In the resale (non-developer) department, here is one currently being rented out for more than 8% Cap.
081018371

As far as houses, here is one at 37th and Polk
086036982

Here is a house in a nice area west of the 805.
086017417

Like I said, the houses are rarer and somewhat more expensive.

However, as investments or homes go, they are not bad deals.

Barring true economic meltdown, they are fairly safe as investements.
All get at least 8% return consistently.
If such a meltdown occurs (no, I don’t buy that the current crisis qualifies) then foreclosure will be the least of our worries.

Regarding FHA loans, inspectors rarely ever show up and never after a couple months.
I use these loans pretty exclusively and I have more familiarity than many of the loan officers I deal with (eg: how many lenders understand 203k loans?).
I won’t help anyone do anything sketchy (like lie on a loan app) but I have had a few decide that renting made more sense after they closed on purchase.

On a side note:
As an agent, this means one can still make a living but the days of universally enthusiastic buyers and easy lending are way gone. For me this is great because I am better at discussing investment options and offer/negotiation strategies than I am at being a salesman in the classical sense.

[urbanrealtor]

[quote=SD Realtor]Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes[/quote]

Thats right.
I would also expand the zip to92116 and some very select parts of 92102 (though that is really more like south park).
I am sure of the rental rates because recently, I have been engaged to assist buyer in getting them rented.

Like I said that type of equation is harder to match in houses but here are some examples

Here is a conversion project that fell apart halfway through (its at 35th and Meade):
The cheapest 1 bedroom closed at 52k
080042852
The cheapest 2br closed at 80k
086017289
There were about 30 units in this complex that closed at similar prices.

In the resale (non-developer) department, here is one currently being rented out for more than 8% Cap.
081018371

As far as houses, here is one at 37th and Polk
086036982

Here is a house in a nice area west of the 805.
086017417

Like I said, the houses are rarer and somewhat more expensive.

However, as investments or homes go, they are not bad deals.

Barring true economic meltdown, they are fairly safe as investements.
All get at least 8% return consistently.
If such a meltdown occurs (no, I don’t buy that the current crisis qualifies) then foreclosure will be the least of our worries.

Regarding FHA loans, inspectors rarely ever show up and never after a couple months.
I use these loans pretty exclusively and I have more familiarity than many of the loan officers I deal with (eg: how many lenders understand 203k loans?).
I won’t help anyone do anything sketchy (like lie on a loan app) but I have had a few decide that renting made more sense after they closed on purchase.

On a side note:
As an agent, this means one can still make a living but the days of universally enthusiastic buyers and easy lending are way gone. For me this is great because I am better at discussing investment options and offer/negotiation strategies than I am at being a salesman in the classical sense.

[urbanrealtor]

[quote=SD Realtor]Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes[/quote]

Thats right.
I would also expand the zip to92116 and some very select parts of 92102 (though that is really more like south park).
I am sure of the rental rates because recently, I have been engaged to assist buyer in getting them rented.

Like I said that type of equation is harder to match in houses but here are some examples

Here is a conversion project that fell apart halfway through (its at 35th and Meade):
The cheapest 1 bedroom closed at 52k
080042852
The cheapest 2br closed at 80k
086017289
There were about 30 units in this complex that closed at similar prices.

In the resale (non-developer) department, here is one currently being rented out for more than 8% Cap.
081018371

As far as houses, here is one at 37th and Polk
086036982

Here is a house in a nice area west of the 805.
086017417

Like I said, the houses are rarer and somewhat more expensive.

However, as investments or homes go, they are not bad deals.

Barring true economic meltdown, they are fairly safe as investements.
All get at least 8% return consistently.
If such a meltdown occurs (no, I don’t buy that the current crisis qualifies) then foreclosure will be the least of our worries.

Regarding FHA loans, inspectors rarely ever show up and never after a couple months.
I use these loans pretty exclusively and I have more familiarity than many of the loan officers I deal with (eg: how many lenders understand 203k loans?).
I won’t help anyone do anything sketchy (like lie on a loan app) but I have had a few decide that renting made more sense after they closed on purchase.

On a side note:
As an agent, this means one can still make a living but the days of universally enthusiastic buyers and easy lending are way gone. For me this is great because I am better at discussing investment options and offer/negotiation strategies than I am at being a salesman in the classical sense.

[urbanrealtor]

[quote=SD Realtor]Hi Econ –

I did a quick search on the MLS for 92104 under 150k. 28 listings came up and all are attached homes except for 1 detached home on Polk. Now whether they will fetch 1000 a month is something I am not sure of as I am to lazy to run rental rate comps AND work in HOA/Property taxes to calculate the true cap rate. Anyways I would imagine UR was referring to these homes[/quote]

Thats right.
I would also expand the zip to92116 and some very select parts of 92102 (though that is really more like south park).
I am sure of the rental rates because recently, I have been engaged to assist buyer in getting them rented.

Like I said that type of equation is harder to match in houses but here are some examples

Here is a conversion project that fell apart halfway through (its at 35th and Meade):
The cheapest 1 bedroom closed at 52k
080042852
The cheapest 2br closed at 80k
086017289
There were about 30 units in this complex that closed at similar prices.

In the resale (non-developer) department, here is one currently being rented out for more than 8% Cap.
081018371

As far as houses, here is one at 37th and Polk
086036982

Here is a house in a nice area west of the 805.
086017417

Like I said, the houses are rarer and somewhat more expensive.

However, as investments or homes go, they are not bad deals.

Barring true economic meltdown, they are fairly safe as investements.
All get at least 8% return consistently.
If such a meltdown occurs (no, I don’t buy that the current crisis qualifies) then foreclosure will be the least of our worries.

Regarding FHA loans, inspectors rarely ever show up and never after a couple months.
I use these loans pretty exclusively and I have more familiarity than many of the loan officers I deal with (eg: how many lenders understand 203k loans?).
I won’t help anyone do anything sketchy (like lie on a loan app) but I have had a few decide that renting made more sense after they closed on purchase.

On a side note:
As an agent, this means one can still make a living but the days of universally enthusiastic buyers and easy lending are way gone. For me this is great because I am better at discussing investment options and offer/negotiation strategies than I am at being a salesman in the classical sense.

[Author]

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