[HLS]

Purchase of rental property can be done with 10% down, or less, depending on your credit score. To get a great loan, 25%+ is better, and rates AREN’T that much higher than normal, IF you qualify.
I posted an example of current rates on page 2 of “JOE 401K” thread.

No lender will accept a verbal “we are selling our other house” and not factor in the debt.

Many people have situations where their current loan is only under one spouse. There are many ways to purchase another, including using the other spouse or a friend or relative.
There are homes that people have been living in and paying the mortgage on and they have a pile of equity, but the deed or loan isn’t in their names, it’s a relative.
IF they want to sell, it creates problems regarding taxes etc.

If you live in Temecula, a 2nd home couldn’t be Murrieta. It usually has to be a resort/vacation destination. Idylwild, Big Bear, Palm Springs, etc. but NOT Hemet.

People are just complacent. Even if you guaranteed them that their house was going to drop $100K or $200K or that they could buy the house next door for $50k or $100k less than they owe right now, most people wouldn’t move.

Most people don’t make business decisions nor grasp the severity. It’s just easier to bury their head in the sand and wait for the storm to blow through. Even moving next door requires effort, OR they just don’t want to bother.

I know plenty of people that have plenty of equity that accept that their house is going to drop at least 25%-30% from the peak, but they aren’t going to make any changes. It’s their home, and still worth a lot more than they paid or ever dreamed it would be worth.

[HLS]

Purchase of rental property can be done with 10% down, or less, depending on your credit score. To get a great loan, 25%+ is better, and rates AREN’T that much higher than normal, IF you qualify.
I posted an example of current rates on page 2 of “JOE 401K” thread.

No lender will accept a verbal “we are selling our other house” and not factor in the debt.

Many people have situations where their current loan is only under one spouse. There are many ways to purchase another, including using the other spouse or a friend or relative.
There are homes that people have been living in and paying the mortgage on and they have a pile of equity, but the deed or loan isn’t in their names, it’s a relative.
IF they want to sell, it creates problems regarding taxes etc.

If you live in Temecula, a 2nd home couldn’t be Murrieta. It usually has to be a resort/vacation destination. Idylwild, Big Bear, Palm Springs, etc. but NOT Hemet.

People are just complacent. Even if you guaranteed them that their house was going to drop $100K or $200K or that they could buy the house next door for $50k or $100k less than they owe right now, most people wouldn’t move.

Most people don’t make business decisions nor grasp the severity. It’s just easier to bury their head in the sand and wait for the storm to blow through. Even moving next door requires effort, OR they just don’t want to bother.

I know plenty of people that have plenty of equity that accept that their house is going to drop at least 25%-30% from the peak, but they aren’t going to make any changes. It’s their home, and still worth a lot more than they paid or ever dreamed it would be worth.

[HLS]

75% allocated to rental income is correct, I think that I stated that above. With a full doc loan, they would like to see a signed lease, with a stated it may not be an issue.

Some lenders will request 1 or 2 additional forms from the appraiser to determine fair market rent for the property and operating schedule, which can cost an extra $50 or $100.

Absentee property ownership isn’t for everyone, nor would I recommend it on a tight budget. When small things go wrong, you need to pay someone to take care of them, it would be nothing if you lived nearby.

You cannot constantly drive by to check on things which would drive many people crazy. To me it’s not much different than owning a mutual fund. You are relying on your manager for both.

It’s hard to comprehend areas where a house is $125K, and many people cannot afford to buy, but there are renters in every market. It’s hard to pick the perfect area for a long term investment, but the depreciation write off and ROI potential works well for many willing to take the risk.

Although multi units can offer a better return, a single house can still be better than nothing.
It also allows you the occasional tax deductible trip to check on your investment.

Lenders are in business to loan money. Meet their criteria du jour and they will fund. The stronger you are financially, the easier it is to get funded, but it still takes jumping through hoops for full doc.

[HLS]

75% allocated to rental income is correct, I think that I stated that above. With a full doc loan, they would like to see a signed lease, with a stated it may not be an issue.

Some lenders will request 1 or 2 additional forms from the appraiser to determine fair market rent for the property and operating schedule, which can cost an extra $50 or $100.

Absentee property ownership isn’t for everyone, nor would I recommend it on a tight budget. When small things go wrong, you need to pay someone to take care of them, it would be nothing if you lived nearby.

You cannot constantly drive by to check on things which would drive many people crazy. To me it’s not much different than owning a mutual fund. You are relying on your manager for both.

It’s hard to comprehend areas where a house is $125K, and many people cannot afford to buy, but there are renters in every market. It’s hard to pick the perfect area for a long term investment, but the depreciation write off and ROI potential works well for many willing to take the risk.

Although multi units can offer a better return, a single house can still be better than nothing.
It also allows you the occasional tax deductible trip to check on your investment.

Lenders are in business to loan money. Meet their criteria du jour and they will fund. The stronger you are financially, the easier it is to get funded, but it still takes jumping through hoops for full doc.

[HLS]

When this mess is over in a few years, I bet that the tax code involving non-recourse debt gets changed for the next time around….
Along with a few other things.

[HLS]

When this mess is over in a few years, I bet that the tax code involving non-recourse debt gets changed for the next time around….
Along with a few other things.

[HLS]

In CA, in general, when you get foreclosed on, IF you still have your original “purchase money loan” it is NON recourse debt, which means the debt is secured by the property and nothing more.
You will not get a 1099-C nor a deficiency judgment, nor owe any income tax for debt relief.

Your credit score will suffer. It will rise over time and it will stay on your credit report for 7 years.

IF your loan is a REFI loan, you will have issues to deal with. That is RECOURSE debt. See IRS guidelines for details.

[HLS]

In CA, in general, when you get foreclosed on, IF you still have your original “purchase money loan” it is NON recourse debt, which means the debt is secured by the property and nothing more.
You will not get a 1099-C nor a deficiency judgment, nor owe any income tax for debt relief.

Your credit score will suffer. It will rise over time and it will stay on your credit report for 7 years.

IF your loan is a REFI loan, you will have issues to deal with. That is RECOURSE debt. See IRS guidelines for details.

[HLS]

There is no requirement that is different because it is out of state.
As long as you can qualify for an investment property loan, there are higher limits for conforming amounts on 2,3 and 4 units. 1 unit is $417,00, 2 units is $533,850, 3 units is $645,300 and 4 units is $801,950.

You can still get stated income/stated asset loans with a credit score above 680 on 1 or 2 units, with 25% down.
Full Doc you can go to 90% on 1-2 units (10% down) or 75% on 3-4 units (25% down)

Full Doc, Score above 680, with at least 25% down will get you the best rates, about 6.375%-6.50% today on 1 or 2 unit investment property. 30 YR Fixed P&I OR around 6% for a 5 YR interest only.

If buying in a vacation area, you can get better rates if buying a “2nd home” rather than a rental.
When figuring net rental income, lenders only credit you with 75% to allow for vacancy and maintenance, plus taxes and ins, etc for qualifying.

When buying a 2nd home, there is no rental income to use, just taxes and ins. so it’s a bit harder to qualify, but does get you better rates. 20% down= 6.25% 30 YR Fixed OR 5.75% 5 YR i/o

[HLS]

There is no requirement that is different because it is out of state.
As long as you can qualify for an investment property loan, there are higher limits for conforming amounts on 2,3 and 4 units. 1 unit is $417,00, 2 units is $533,850, 3 units is $645,300 and 4 units is $801,950.

You can still get stated income/stated asset loans with a credit score above 680 on 1 or 2 units, with 25% down.
Full Doc you can go to 90% on 1-2 units (10% down) or 75% on 3-4 units (25% down)

Full Doc, Score above 680, with at least 25% down will get you the best rates, about 6.375%-6.50% today on 1 or 2 unit investment property. 30 YR Fixed P&I OR around 6% for a 5 YR interest only.

If buying in a vacation area, you can get better rates if buying a “2nd home” rather than a rental.
When figuring net rental income, lenders only credit you with 75% to allow for vacancy and maintenance, plus taxes and ins, etc for qualifying.

When buying a 2nd home, there is no rental income to use, just taxes and ins. so it’s a bit harder to qualify, but does get you better rates. 20% down= 6.25% 30 YR Fixed OR 5.75% 5 YR i/o

[HLS]

The option to inherit their house ?
Isn’t that up to them ??

Why do you think that you need a lawyer ?

If you are talking about keeping their property tax base, you will, as long as title is transferred properly.

This is normally handled on the PCOR form from the county.
Call the SD County Assessors office.

It doesn’t require a lawyer, and isn’t complicated.

[HLS]

The option to inherit their house ?
Isn’t that up to them ??

Why do you think that you need a lawyer ?

If you are talking about keeping their property tax base, you will, as long as title is transferred properly.

This is normally handled on the PCOR form from the county.
Call the SD County Assessors office.

It doesn’t require a lawyer, and isn’t complicated.

[HLS]

I didn’t lose a good chunk or a small chunk on stocks.

IN ANY MARKET, A Loss “ON PAPER” is still a loss, which may or may not ever come back.

Past returns are no indication/guarantee of future returns.

Survey and I are on the same page.
Neither one of us is talking about SD RE PE.

You have your points. My poison has been chosen.

The returns that you quote are typical MSM kool-aid.

There is NO WAY that the S&P has compounded 7% Year over year for 100 years. Just isn’t possible. $1 invested at 7% compounded over 100 years would net almost $900.
The S&P hasn’t gone up 900X

That also doesn’t account for taxes paid on realized gains which can be deferred forever with 1031 exchanges.

There hasn’t been a generation that has comfortably retired en masse on stocks. The test is coming and I won’t be a large part of it. I’ll be watching from a distance, hopefully collecting rent from tenants monthly.

I am NOT saying that one cannot make money holding/trading stocks. I AM saying that thinking they will only go up and that index funds are security for the future is misleading…. sounds like propaganda for buying a house.

Real estate isn’t without its risks either.

It would be interesting to compare the net worth of a RE investor who leveraged properly and deferred taxes paid to the net worth of a stock market investor after 20-30 years.

It’s not about what you make,, it’s about what you keep.

“The stock market is nothing more than gambling and a legalized pyramid scheme”

“the stock market is simply based on the greater fool theory”

Many people WILL get burned in the stock market.
Some wont.

[HLS]

I didn’t lose a good chunk or a small chunk on stocks.

IN ANY MARKET, A Loss “ON PAPER” is still a loss, which may or may not ever come back.

Past returns are no indication/guarantee of future returns.

Survey and I are on the same page.
Neither one of us is talking about SD RE PE.

You have your points. My poison has been chosen.

The returns that you quote are typical MSM kool-aid.

There is NO WAY that the S&P has compounded 7% Year over year for 100 years. Just isn’t possible. $1 invested at 7% compounded over 100 years would net almost $900.
The S&P hasn’t gone up 900X

That also doesn’t account for taxes paid on realized gains which can be deferred forever with 1031 exchanges.

There hasn’t been a generation that has comfortably retired en masse on stocks. The test is coming and I won’t be a large part of it. I’ll be watching from a distance, hopefully collecting rent from tenants monthly.

I am NOT saying that one cannot make money holding/trading stocks. I AM saying that thinking they will only go up and that index funds are security for the future is misleading…. sounds like propaganda for buying a house.

Real estate isn’t without its risks either.

It would be interesting to compare the net worth of a RE investor who leveraged properly and deferred taxes paid to the net worth of a stock market investor after 20-30 years.

It’s not about what you make,, it’s about what you keep.

“The stock market is nothing more than gambling and a legalized pyramid scheme”

“the stock market is simply based on the greater fool theory”

Many people WILL get burned in the stock market.
Some wont.

[HLS]

The stock market is fine for many people. There are millions of sheep “investing” via deductions from every paycheck, because it’s what they have been told is the right thing to do. It’s mindless.

The govt is behind this propaganda, wanting to create an alternative to SSI. I don’t think it will be long before minimum drawing age will be 70, proving that 70 IS the new 62.

Unless you are lucky enough to ride a rocketship, (which most people aren’t) the stock market is simply based on the greater fool theory, similar to housing except that while virtually ALL homes have gone up over long periods of time,
ALL stocks have NOT gone up over time.

I also don’t believe that 100% invested in stocks can compete with 20% invested in real estate and the return from leverage on the 20%.

For most people, they will be late to the party for the stock/industry du jour, and will get in near the top just in time for the bust.
Here’s an example of a stock up 750% THIS YEAR,
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=drys&sid=0&o_symb=drys&freq=1&time=8&x=45&y=15
I wouldn’t be buying now, but plenty of people love this type of stock.

There are no guarantees, and thankfully everone isn’t on the same bus.

[Author]

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