Getting a mortgage for investment property these days

User Forum Topic
Submitted by enron_by_the_sea on January 25, 2010 - 12:47am

So every now and then I get tempted to think about getting a little investment property. But I don't know how banks are treating investment properties these days. Can knowledgeable folks on this board provide a few pointers about

[1] Interest rates charged for non-owner occ properties

[2] down payment requirements

[3] Income requirements for loan qualifications.

{ I suspect that when I know about those, my itch for buying investment property will go away :) }

Thanks

Submitted by UCGal on January 25, 2010 - 9:54am.

I've been using aimloan.com to what-if the scenarios... They allow you to select income property as one of your options to get rates.

There seems to be a rate premium if you put less than 25% down. I was seeing 5.5% with a 0.5 point last week.

I can't answer about the income requirements... I would imagine that you would need to show the ability to pay the mortgage... but lenders don't always act rationally.

Submitted by FormerSanDiegan on January 25, 2010 - 5:08pm.

We refinanced our SFR rental property in December.
I believe that we needed about 70% LTV (30% down) for the best rates (we have nearly 50% equity, so I don't know the exact cutoff), but I think you can go to 75% LTV (25% down), and not suffer signifcant rate increases.

We paid about 1 extra point to get the same rate you could get at the time for owner occupied. Our rate was below 5%.

In our case, the income requirements were still pretty ridiculous (~ 50% DTI or more was allowed), so we did not even have to include the income from the rental to qualify. Our lender told us near the end of the process that this requirement was becoming more stringent, however.

Here's what I would use for rules-of-thumb:

1. assume 25% down payment
2. Assume rates 0.25% above onwner-occ.
3. Assume you need to have a DTI below 45%, excluding the rental income from your income calculation (but including the loan PITI)

I am not sure if/how rental income would be included in today's market for purchase. In the old days (before 2003) a rental agreement was sufficient. But I think there are more restrictions now.

Submitted by briansd1 on January 25, 2010 - 5:13pm.

Residential or commercial investment?

I believe that commercial has yet to fall hard. Wait a while.

Submitted by enron_by_the_sea on January 25, 2010 - 10:53pm.

Thanks everyone. Really appreciate the info!!!

Submitted by FormerSanDiegan on January 26, 2010 - 9:54am.

briansd1 wrote:
Residential or commercial investment?

I believe that commercial has yet to fall hard. Wait a while.

I assumed by the term "little investment property" that enron was referring to a 1-4 unit property.

Commercial property loans for greater than 4 units play by different rules.

Submitted by HLS on January 26, 2010 - 1:42pm.

Loan pricing & qualifying is more complicated than ever before. It depends on credit score and equity to start with.

If you are looking for a 30 YR fixed loan, in most cases a BANK is a mortgage broker. They do not make their own rules. Loans are underwritten to Fannie/Freddie guidelines and sold off to them immediately, even if the bank retains the servicing rights. You may or may not get a better deal from a mortgage broker, if that is what you are looking for.

The best pricing for rental property requires a mid credit score of 740 or above and at least 25% equity. (It makes no difference if you have 75% equity) the pricing hit is 1.75% of the loan amount. You can either pay the 1.75% up front and get a lower rate OR get a rate that is .25-.375% higher, fixed for 30 yrs. With 20% equity it's a 3.00% hit. Fannie/Freddie will not finance rental purchases with less than 20% down.

All depends on your expected time frame of owning the property as to what makes sense. The cost to get the rate moves around a bit every single business day, based on the bond markets.

2-4 units cost more than single family homes. Condos and townhomes can be MUCH more difficult to finance(or impossible)

Today, 5.00% is available for rentals with less than a point or 5.125% without points. By paying the 1.75% hit and points you can get down to 4.625% IF you qualify. It's not as simple as most people think.
Income and assets are another piece of the puzzle.
Owner occupied properties get better pricing.
..HLS

Submitted by earlyretirement on August 28, 2012 - 7:21pm.

Rather than start a new thread, I thought I'd "piggyback" (no pun intended) on this thread.

So I finally got back in the market and bought my primary house last year. Now I'm thinking of picking up an investment property.

I haven't bought an investment property in the USA for a LONG time. Just reaching out to lenders today it seems like buying an investment property that is a condo with 25% down payment is 3.875% for 30 year fixed or 3.25% for 15 year fixed.

Also, he said if I wanted to refinance my house and pull equity out of it, it would be 3.5%.

Does that sound about right to you experts? The broker said condos are automatically around 0.75% higher. Which sounded high to me, but admittedly it's been a long long time since I bought an investment property in the USA.

Has anyone bought an investment property recently in SD? What kind of rates were you quoted out of curiosity?

Submitted by SD Realtor on August 28, 2012 - 7:28pm.

The rates you quoted sounded on target early. You may want to also try aimloan.com. They are pretty competitive and I have used them for rentals in and out of state and they are located in San Diego.

Submitted by earlyretirement on August 28, 2012 - 8:01pm.

SD Realtor wrote:
The rates you quoted sounded on target early. You may want to also try aimloan.com. They are pretty competitive and I have used them for rentals in and out of state and they are located in San Diego.

Thanks so much SD Realtor for that information.

That's good to hear about the rates being on target.

One thing I forgot to mention in my post is the broker told me that if you put 25% vs. 20% or less the 0.75% premium for a condo goes away. So I thought that was interesting.

Something else I found interesting is he said that as long as you do a 15 year loan vs. a 30 year loan there is no real benefit to having a high FICO as long as it's over the minimum 660 FICO score (Mine is 800).

SD Realtor, he also said that they will count 75% of the rental income towards the ratio. How do they come up with the actual potential rental prices?

I assume they just do a median estimate of rental prices based on the comps in the area? Is this the actual median prices based on what is currently on the market or does the inspector solely determine this?

I was just curious about that part.

Thanks again.

Submitted by spdrun on August 28, 2012 - 8:01pm.

The "cheat" to get a loan under commercial rules is to buy a 1 or 2 unit property with a storefront.

Submitted by Coronita on August 28, 2012 - 8:37pm.

earlyretirement wrote:
Rather than start a new thread, I thought I'd "piggyback" (no pun intended) on this thread.

So I finally got back in the market and bought my primary house last year. Now I'm thinking of picking up an investment property.

I haven't bought an investment property in the USA for a LONG time. Just reaching out to lenders today it seems like buying an investment property that is a condo with 25% down payment is 3.875% for 30 year fixed or 3.25% for 15 year fixed.

Also, he said if I wanted to refinance my house and pull equity out of it, it would be 3.5%.

Does that sound about right to you experts? The broker said condos are automatically around 0.75% higher. Which sounded high to me, but admittedly it's been a long long time since I bought an investment property in the USA.

Has anyone bought an investment property recently in SD? What kind of rates were you quoted out of curiosity?

Yup, that sounds about right. Actually, I'm doing the reverse. I bought a cheap condo for cash, and now trying to do a cash out refi...

I'm hitting 3 issues
1. Cash out refi is limited to 70-75% (not really that big a deal)

2. Rate is about .75% higher, and I can't find a decent no-cost option (even at absolute mortgage..My lender I did a refi with doesn't finance investment properties.

3. Some places won't make a loan less than $100k.

My broker friend recommended that the cheapest option for me would be to cash-out refi my primary... But I'm trying to avoid that because I want my primary to be free and clear sooner versus later...

I tapped my 401k with a loan @ 4% since I end up paying it back to myself, and since I wanted to reduce my 401k stock holdings at the time.

I have an untapped heloc @ 3% on my primary, that I can pull if I need to...Not sure if I want to go that route though. I mainly want to free up as much borrowed cash as possible for a hopefully pending purchase that will go through, as well as possibly more.

I wish the banks would relax the lending standards for rental props for people like me, but they're still kinda strict about it.

Submitted by Coronita on August 28, 2012 - 8:40pm.

earlyretirement wrote:

One thing I forgot to mention in my post is the broker told me that if you put 25% vs. 20% or less the 0.75% premium for a condo goes away. So I thought that was interesting.

Really? That wasn't the case for me... But let me look into it.

Quote:

SD Realtor, he also said that they will count 75% of the rental income towards the ratio. How do they come up with the actual potential rental prices?

I assume they just do a median estimate of rental prices based on the comps in the area? Is this the actual median prices based on what is currently on the market or does the inspector solely determine this?

I was just curious about that part.

Thanks again.

I believe the caveat though is you must have been a landlord I think for the past 2 years. And you need to provide 1-2 years worth of tax returns to prove your rental income.
If you haven't been a landlord for an established period of time, even if you have a rental income right now, it won't count I believe.

Submitted by spdrun on August 28, 2012 - 8:57pm.

AFAIK, *current* rental income counts regardless of time as a landlord. Proposed rental income from the property you're buying doesn't count unless you've been a LL for several years.

Submitted by earlyretirement on August 28, 2012 - 11:03pm.

flu wrote:

Yup, that sounds about right. Actually, I'm doing the reverse. I bought a cheap condo for cash, and now trying to do a cash out refi...

I'm hitting 3 issues
1. Cash out refi is limited to 70-75% (not really that big a deal)

2. Rate is about .75% higher, and I can't find a decent no-cost option (even at absolute mortgage..My lender I did a refi with doesn't finance investment properties.

3. Some places won't make a loan less than $100k.

My broker friend recommended that the cheapest option for me would be to cash-out refi my primary... But I'm trying to avoid that because I want my primary to be free and clear sooner versus later...

I tapped my 401k with a loan @ 4% since I end up paying it back to myself, and since I wanted to reduce my 401k stock holdings at the time.

I have an untapped heloc @ 3% on my primary, that I can pull if I need to...Not sure if I want to go that route though. I mainly want to free up as much borrowed cash as possible for a hopefully pending purchase that will go through, as well as possibly more.

I wish the banks would relax the lending standards for rental props for people like me, but they're still kinda strict about it.

Thanks Flu.

I actually bought my primary residence last year and paid cash. Problem is I set it up under an LLC and it sounds like it's complicated or at least I'd have to pull it out of the LLC to take equity from it (or at least that is what the broker mentioned) but honestly I have no experience with this at all.

If anyone has pulled out equity out of a house owned by an LLC I'd be interested in hearing about that.

Flu, yes the mortgage broker did say that 0.75% premium for condos goes away if you put down at least 25% vs. 20%. Of course you still have the premium for it being an investment property vs. a primary residence.

I also would prefer not to pull out equity out of my primary home which is free and clear. There is always a nice feeling about having your primary residence paid off.

Yes, it sounds ridiculous how strict the lenders are on these investment properties. The broker was joking that some deadbeat with a mediocre/decent FICO can get a VA or FHA loan and be fairly overleveraged.

He said one of his clients will have something like $40 left after his down payment and putting a very low downpayment yet those types can often get a mortgage easier than a solid buyer with a high FICO with great income buying investment properties.

spdrun wrote:
AFAIK, *current* rental income counts regardless of time as a landlord. Proposed rental income from the property you're buying doesn't count unless you've been a LL for several years.

Hmm... I'm not sure about this as all my rental properties are foreign properties. I do have almost a decade track record renting out properties but not in San Diego.

Can you be an experienced landlord in any city as long as you have it well documented? Or does it have to be the same city from the proposed property you are buying?

Submitted by SD Realtor on August 29, 2012 - 6:40am.

Early - What I have found is that there is always some murkiness with regards to the underwriting guidelines that each originator has. Lots of people like to make postings about experiences that they have had and make it sounds like the gospel. I would preach that alot of the questions you have posted about are best discussed with the lender you select rather then with posters.

I would agree with FLU based on his locale and experience. We did our rentals opposite of what he did, we simply financed all of them and did end up putting down 25-30% in all the cases. We did not pull equity out of our home to make the purchase either. All of our rentals were purchased out of state and they are pure cash flow plays but we did use Aim.

Also understand that the levels of knowledge grow as you move inward. The loan officer is okay... your processor is better and will have better detailed knowledge of the underwriting guidelines as they pertain to your unique situation... of course you never have access to the underwriter but they are the golden goose. So yeah using a rough number of 75% of the rental income is a good swag. Seasoned rentals (having at least a tax return with that rental on it) are more helpful then recently purchased rentals but that doesn't mean that they will not use your income from a recently purchased rental. You will most likely have to prove it. Also in my case we had to prove (I think) it was 6 months reserves for all of our properties combined. Again, this was our case with Aim and doesn't mean it will apply to you.

When you say foreign properties do you mean internationally foreign? I am not sure how they would treat it but if they are on your schedule C then that would help, simply ask. If they are anywhere in the USA then not a problem at all.

Submitted by earlyretirement on August 29, 2012 - 7:41am.

Thanks again SD Realtor. Your posts are helpful. These boards are a wealth of knowledge based on people's real life experiences.

I agree with you that there is a lot of "murkiness" when it comes to underwriting guidelines on investment properties. That's why I still like to hear about others experiences but I agree it's better to take up these things with the lender.

It does seem to be the best way to approach this is put down 25% to 30% as you did and just finance the rest at the lowest rate possible.

As far as 6 months reserves, that won't be a problem. We could buy the entire property for cash if we wanted to but we want to have some "powder" dry on the sidelines in case we want to buy more. But that is good to know. The mortgage broker didn't mention about this 6 months reserves. We just sent all our bank statements, tax returns, etc. and they sent a pre-approval letter.

Yes, I meant internationally foreign all outside of the USA.

We aren't in any rush to buy and the other thing is there isn't much good inventory on the market. And it's not even really a cash flow play.

The idea is to possibly do short term rentals in it, have family stay there when they come to visit but mostly to buy a nice place not too far from the beach that will eventually be our place once we totally retire and the kids are out of the house.

We have a big 5 bedroom 5 bathroom house now that we definitely will want to downsize from once the kids leave and go off to college. So part of the plan is we will move to this place and both places will be paid off by then. So we can either sell the bigger house or just rent it out and use that cash flow.

Thanks again for your helpful posts.

Submitted by no_such_reality on August 29, 2012 - 8:35am.

How's the SD small unit market doing these days? Tri or fourplex market?

In OC, buying any rentals is nearly impossible, anything worth buying has 3 cash offers by noon the first day it shows up.

Submitted by SD Realtor on August 29, 2012 - 8:41am.

NSR it is tight... super tight... not just in SD but in many other cities as well. We bought a fourplex in another city last March and since then it has gotten even tighter for the submarket we are looking at in that city for similar properties.

Early remember that the reserve reqt I told you about was for us and we were doing it with Aim. It may vary with others.

Submitted by an on August 29, 2012 - 8:56am.

no_such_reality wrote:
How's the SD small unit market doing these days? Tri or fourplex market?

In OC, buying any rentals is nearly impossible, anything worth buying has 3 cash offers by noon the first day it shows up.

For the area that I know (MM), there are currently only 7-8 active condo for sale. Keep in mind that MM has a population of over 23k household and 74k people. Any that's priced right will have several cash offers on the first day.

Submitted by Coronita on August 29, 2012 - 10:16am.

earlyretirement wrote:
Thanks again SD Realtor. Your posts are helpful. These boards are a wealth of knowledge based on people's real life experiences.

I agree with you that there is a lot of "murkiness" when it comes to underwriting guidelines on investment properties. That's why I still like to hear about others experiences but I agree it's better to take up these things with the lender.

It does seem to be the best way to approach this is put down 25% to 30% as you did and just finance the rest at the lowest rate possible.

As far as 6 months reserves, that won't be a problem. We could buy the entire property for cash if we wanted to but we want to have some "powder" dry on the sidelines in case we want to buy more. But that is good to know. The mortgage broker didn't mention about this 6 months reserves. We just sent all our bank statements, tax returns, etc. and they sent a pre-approval letter.

Yes, I meant internationally foreign all outside of the USA.

We aren't in any rush to buy and the other thing is there isn't much good inventory on the market. And it's not even really a cash flow play.

The idea is to possibly do short term rentals in it, have family stay there when they come to visit but mostly to buy a nice place not too far from the beach that will eventually be our place once we totally retire and the kids are out of the house.

We have a big 5 bedroom 5 bathroom house now that we definitely will want to downsize from once the kids leave and go off to college. So part of the plan is we will move to this place and both places will be paid off by then. So we can either sell the bigger house or just rent it out and use that cash flow.

Thanks again for your helpful posts.

ER... I think for me the problem isn't as much as finding some sort of funding...The problem is finding good rental property candidates that float alright. Historically, we're at near at an all time low rates...And rents are pretty high right now... And for most purposes well qualified borrowers don't really have *that* much of an issue finding financing.

Problem is... Inventory....At least, where I would like to buy. I fear some of the best deals have already past. I really hope I'm wrong.

On the other thread, you mentioned CarmelV...But for me (and it's mainly me). I can't get the numbers to work... I guess it's different one wants to plob down $300-400k in cash for a condo and get say a 4-5% return. But even then it's a stretch

Mira M was one of the few places I could get the numbers to work out ok... But not so much right now...

Submitted by Coronita on August 29, 2012 - 10:15am.

SD Realtor wrote:
Early - What I have found is that there is always some murkiness with regards to the underwriting guidelines that each originator has. Lots of people like to make postings about experiences that they have had and make it sounds like the gospel. I would preach that alot of the questions you have posted about are best discussed with the lender you select rather then with posters.

I would agree with FLU based on his locale and experience. We did our rentals opposite of what he did, we simply financed all of them and did end up putting down 25-30% in all the cases. We did not pull equity out of our home to make the purchase either. All of our rentals were purchased out of state and they are pure cash flow plays but we did use Aim.

Also understand that the levels of knowledge grow as you move inward. The loan officer is okay... your processor is better and will have better detailed knowledge of the underwriting guidelines as they pertain to your unique situation... of course you never have access to the underwriter but they are the golden goose. So yeah using a rough number of 75% of the rental income is a good swag. Seasoned rentals (having at least a tax return with that rental on it) are more helpful then recently purchased rentals but that doesn't mean that they will not use your income from a recently purchased rental. You will most likely have to prove it. Also in my case we had to prove (I think) it was 6 months reserves for all of our properties combined. Again, this was our case with Aim and doesn't mean it will apply to you.

When you say foreign properties do you mean internationally foreign? I am not sure how they would treat it but if they are on your schedule C then that would help, simply ask. If they are anywhere in the USA then not a problem at all.

i was working with a friend who isn't a seasoned landlord, but one that is just starting out. And when he tried to refi his new rental, he couldn't include his new rental income as part of his income. He was telling me that in his case, they required 2years worth of previous tax fillings demonstrating income from any rentals before considering the current rental as income.

Submitted by earlyretirement on August 29, 2012 - 10:28am.

SD Realtor wrote:

Early remember that the reserve reqt I told you about was for us and we were doing it with Aim. It may vary with others.

Yes SD Realtor. Noted. I'm sure the rules probably differ between various companies and also other areas.

flu,

I totally agree with you that the biggest issue seems to be actually being able to find good properties.

Absolutely you're right about the CV area. The returns aren't high in that area at all. Of course you have the capital appreciation potential, but I'm not buying for Capital appreciation really. (in one aspect I guess I do want to buy before I think prices will continue to move up).

I do think prices are near the bottom and I'm QUITE confident that prices in Coastal So Cal will surpass prime prices in the future. It could take a decade or longer but it WILL happen.

Plus rents are high in desirable areas and I don't really see that changing at all.

I do know most people buy investment properties only for the cash flow potential but our goal, as explained as a bit different. We're certainly not going to force a purchase if we can't find anything or buy something that doesn't make sense.

But I do believe in 15 years property prices here close to the Coast will be very expensive again and interest rates will DEFINITELY be higher. Let's be honest..they can't fall much lower.

So it seems to make sense in our situation where we can easily afford the mortgage payments and ideally would like to have a another place paid off (besides our primary) in 15 years. Any possible capital appreciation potential is just icing on the cake.

Submitted by bearishgurl on August 29, 2012 - 10:31am.

earlyretirement wrote:
. . . Yes, it sounds ridiculous how strict the lenders are on these investment properties. The broker was joking that some deadbeat with a mediocre/decent FICO can get a VA or FHA loan and be fairly overleveraged.

He said one of his clients will have something like $40 left after his down payment and putting a very low downpayment yet those types can often get a mortgage easier than a solid buyer with a high FICO with great income buying investment properties.

early, don't be envious of these poor slugs that your mtg broker is mentioning who are taking out VA/FHA loans with “$40 left” to their name. The vast majority are likely first-time buyers of a principal residence. The up front-fees (PLUS monthly fees on FHA) on both of these programs are very, very high, likely rendering the buyer "underwater" upon COE. That is, unless they purchased well under market, which is not very likely in CA coastal counties, due to the bureaucracy of these programs being well-known to sellers.

See:
http://en.wikipedia.org/wiki/FHA_insured...

. . . On June 11, 2012, the FHA deployed a two-tiered private mortgage insurance schedule. New FHA mortgages and refinances of an existing FHA mortgage which was endorsed by the FHA on, or after, June 1, 2009 are subject to an upfront mortgage insurance premium (UFMIP) of 1.75% and an annual mortgage insurance premium (MIP) of up to 1.50%. Upfront and annual mortgage insurance premiums for FHA loans which replace existing FHA which were endorsed by the FHA prior to June 1, 2009 via the FHA's streamline refinance program pay just 0.01% and 0.55%, respectively.[9]

FHA-insured homeowners using a 15-year loan term and with more than 22% home equity are exempt from annual mortgage insurance payments.

And: http://www.vanewsblog.com/2011/09/va-loa...

. . . According to a VA circular posted at VA.gov, “For loans closed on or after October 1, 2011, the fee for subsequent use loans with less than 5 percent downpayment and subsequent use regular refinance loans will be 2.8 percent for both active duty Servicemembers, Veterans, and persons qualifying based solely on service in the Reserves or National Guard.”. . .

Due to their no or low-downpayment requirement (of less than 5%), their up-front “mortgage insurance premiums” on a $300K (with the minimum downpayment) loan are $8,400 (VA “funding fee”) and +/- $4,000 (FHA up-front MIP), making their total closing costs approx. $11K-$13K, depending upon the program and lender.

With great credit and 30% down, you could likely borrow $300K in purchase $$ from a conventional lender at zero cost or for under $4400 in closing costs AND possibly be eligible for a rebate at COE!

HLS, ctr70 or other mtg broker, feel free to correct me if you see something amiss here :)

Submitted by earlyretirement on August 29, 2012 - 10:35am.

Hi BG,

Oh don't worry.. I'm NOT envious of those poor slugs that really can't afford to buy. I've always been one of those people that thought if you can't afford at least a 15% to 20% or more down payment you shouldn't be buying.

Borrowing money to buy will probably not get much cheaper than it is now. I also negotiated with my realtor to kick back 1% of the commission she will split with the seller's realtor to me. I did the same thing on my last purchase and everyone was happy as I did all of the due diligence and research.

If you have good cash flow, assets, high FICO score, now seems like to be the best time to buy a property with it being so cheap to borrow money.

0 points. $895 Lender Fee (they wanted $1300 but negotiated it down to match the lowest quote I got). Appraisal, credit, tax not to surpass $475.

The only problem seems to be finding great properties in great condition. There is almost no good inventory.

Submitted by Coronita on August 29, 2012 - 10:37am.

earlyretirement wrote:
SD Realtor wrote:

Early remember that the reserve reqt I told you about was for us and we were doing it with Aim. It may vary with others.

Yes SD Realtor. Noted. I'm sure the rules probably differ between various companies and also other areas.

flu,

I totally agree with you that the biggest issue seems to be actually being able to find good properties.

Absolutely you're right about the CV area. The returns aren't high in that area at all. Of course you have the capital appreciation potential, but I'm not buying for Capital appreciation really. (in one aspect I guess I do want to buy before I think prices will continue to move up).

I do think prices are near the bottom and I'm QUITE confident that prices in Coastal So Cal will surpass prime prices in the future. It could take a decade or longer but it WILL happen.

Plus rents are high in desirable areas and I don't really see that changing at all.

I do know most people buy investment properties only for the cash flow potential but our goal, as explained as a bit different. We're certainly not going to force a purchase if we can't find anything or buy something that doesn't make sense.

But I do believe in 15 years property prices here close to the Coast will be very expensive again and interest rates will DEFINITELY be higher. Let's be honest..they can't fall much lower.

So it seems to make sense in our situation where we can easily afford the mortgage payments and ideally would like to have a place paid off in 15 years. Any possible capital appreciation potential is just icing on the cake.

let the truth be known... Flu doesn't have enough money to be able to consider most of CarmelV as investment property...:)

No seriously, I would love to be able to pay cash for some speculative property in CarmelV...But my pockets aren't that deep (...yet, if ever)....So I cannot afford to just let a property sit with 0%-3% gain now and wait years for capital appreciation (if any). IF my pockets were deeper, I would take a bigger gamble on SFH's in CarmelV versus attached communities. I feel while the attached communities have come down in price, i'm not sure if we're done yet. Contrary, for SFH, I'm not seeing that much of a price drop in some of the choosier areas...

I guess one day, I can convince myself I need a bigger house with more garage space, and then do something with my existing primary, which hopefully will be free and clear in a few years, based on my current plan...Not that I'm in particularly hurry to pay that off either.

Submitted by earlyretirement on August 29, 2012 - 10:40am.

Ha, ha. Funny flu. No doubt, Carmel Valley is quite pricey. We looked around there when we were buying our primary and I just couldn't justify it compared to some other areas.

I do have to say it was VERY convenient and close to the beach which was great. Once I'm an old fart, I think it would be an easy place to be retired.

Absolutely I totally agree about most investors not wanting to sit around a few years with 0% to 3% gains. That is about what I figured as well unless you get lucky doing shorter weekly rentals to tourists which I have seen some work.

But we already have many rental properties working for us so I feel like we can take a bit of a gamble on CV. We'll see how it goes.

Submitted by Coronita on August 29, 2012 - 10:55am.

EA.... well for one investment property I'm trying to cash out refi... get this

Borrow $100k on an investment condo...
With 30 year fixed on 3.375% with 1.875 points (closing cost $6k)
Or 30year fixed on 4.875% with -1.551 points (closing cost $3k)...

Uh... yah...Cashing out $100k from the primary would be much cheaper..Maybe's me think some times why even bother...But then, I guess I need to nickel and dime wherever I am...Save reserves for cases really can't get a loan....

But yeah, I'm gonna be bending over on this one.

Submitted by Coronita on August 29, 2012 - 10:59am.

earlyretirement wrote:
Ha, ha. Funny flu. No doubt, Carmel Valley is quite pricey. We looked around there when we were buying our primary and I just couldn't justify it compared to some other areas.

I do have to say it was VERY convenient and close to the beach which was great. Once I'm an old fart, I think it would be an easy place to be retired.

Absolutely I totally agree about most investors not wanting to sit around a few years with 0% to 3% gains. That is about what I figured as well unless you get lucky doing shorter weekly rentals to tourists which I have seen some work.

But we already have many rental properties working for us so I feel like we can take a bit of a gamble on CV. We'll see how it goes.

Actually, I think there are probably some investors that don't mind sitting on 0-3% gain right now, since that's pretty much the same as a CD right now. So they probably figure take the slight chance on future appreciation...I recall SDR mentioned he had a few potential buyers looking in CarmelV as investments for that purpose and I am guessing maybe their motivation my be along that line..

Personally, I would consider it too... Except, like I said, I'm cash poor if we talk about these levels to get a decent buy in CarmelV... :)

Ok, truth be known #2, I'm just jealous that you're in a position to be able to consider CarmelV for an investment.

I'm sure there are deals out there elsewhere that can yield better returns. But at the same time, I don't want to be running all around town...Oh yeah, and prefer not to get shot.

Submitted by bearishgurl on August 29, 2012 - 10:57am.

earlyretirement wrote:
. . . The only problem seems to be finding great properties in great condition. There is almost no good inventory.

Well, time to hit the pavement to research vacants, then, and, if not actually "lender shadow inventory," contact the owners of record and make them an offer.

You don't even need an agent for this and it is preferable to represent yourself in this situation. Have your favorite title and escrow companies in mind, however, and list them in your offer to purchase.

Contrary to popular belief, there are plenty out there but you must be willing to look in older neighborhoods.

Most of these older neighborhoods are VERY desirable to potential tenants ... ESPECIALLY those who grew up in and around there and have relatives still living in the immediate area.

Don't for a minute think older areas would bear less rent (relative to purchase price) as newer areas would. Remember, most older areas are far more conveniently-located and also more "coastal."

Keep in mind your 2+ BR retirement home ... preferably on a >7000 sf lot where you could possibly expand it for your needs down the road. Focus on those locations.

By "older," I mean 35+ years old. Do you have a dog, early? Get in your car and park in one of your "choice" future retirement areas and start walking. Who knows? You might find something you can make a very quiet deal on and fix it minimally to put tenants in who will pay off your 15-year mtg for you :)

Submitted by bearishgurl on August 29, 2012 - 11:18am.

early, the SD County Assessor now has a subscription service to purchase bulk plat maps. I belong to it and it is cheaper than paying $2 for each map.

You can make ONE visit to 1600 Pacific Hwy (north end, 1st ofc on left) to look in the orange binders for an hour-plus to obtain the numbers of the maps of your choice (good lot configurations for parking toys, alley access, facing a certain direction, ocean or whitewater view, etc) and then order them online and they will be mailed to you in bulk. Keep them for future reference and begin to monitor the public records of the properties within them. Keep in mind those which have little to zero owing on them and also those with out-of-county owners.

https://arcc.co.san-diego.ca.us/subscrip...

Pay no attention to the over-mortgaged, foreclosed and about-to-be-foreclosed as these properties already have a "captive audience" chasing them.

If you have the "right" maps of the "right" blocks, you won't find very many, IF any, "distressed" properties. Those areas typically hold their values (and even appreciate, ESP if remodeled) very, very well :)

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