[chassis]

Originally Posted by ///MPhatic

All I know is that I'm SOL because I have no idea what you just wrote. lol

In summary:

CRE is in rough waters now, and this will not change soon.

Residential RE is a nightmare as noted in previous posts.

Exceptions have always, and will always, exist.

Not an attractive place to put my capital.

[chassis]

So 7% of gross rental is paid to a third party, which means significantly more than 7% of NOI.

The play as you stated is capital appreciation.

It means long term illiquidity in my view, with significant holding and transaction costs. Not attractive.

[ASAP]

I recently bought a house for myself as I had a good option to upgrade... there are still so many things that I question about the entire real estate purchasing / mortgage industry process... if you look deep down, it's kind of a scam across the board lol.

1. Rates - FHA loans get better rates than conventional loans.... why? because the govt chooses to back loans for "less qualified buyers" with lower downpayments lol? So the guys with a convential loan and 50% downpayment gets a worse rate than a new buyer w a 5% down FHA loan?

2. PMI - (doesn't apply to me) but can someone explain why this exists and why this option is even allowed? Why would homes be sold at 5% down lol? This is just asking for an upside down equity scenario in any sort of downturn as we see now.

3. LTV - If you loan to value is higher - you get a better rate? What? So if you take out a larger loan vs the value of your home, you can get a better rate because apparently the banks can scam you on more interest lol.

4. Title Insurance - just so I understand... is this to protect me or the title company lol? This is an incredible way for the title company to basically put off all of their own risk back on the buyer... you aren't really protecting yourself... you're actually in fact paying to protect them in case if they fail at their job.

5. Agent commissions... I had an awesome buying agent and again it didn't cost me anything as the buyer... but if I was the seller... a 20k payment to both the selling and buying agent for limited amount of work would really irritate me.. the amount of work done doesn't equal the value. The recent NAR ruling at least partially resolved this.

The whole process in and out seems like a way just to squeeze the max money out of the transacting parties. It's ridiculous.

[Bc2005]

1. Conventional loan with 50% down should get a great rate (very low risk to the bank), but banks are a captive to the loan buying and selling process.
They want to be able to sell your loan if necessary, so they follow industry norms for all their loans. A big bank might love to take your big down payment and give you a better rate, but then they may be unable to sell your loan to another bank.
Example - if you put down a very large down payment, and have plenty of cash in the bank, but the loan payment is a higher percentage of your monthly income than their “standard”, they may not want to give you a loan at the best rate.

2. PMI is a standard measure to mitigate risk to the bank.

3. I think you misunderstand LTV. The banks want high value and low loans, so a low LTV.

4. Title insurance is legitimate, but still quite a racket. You buy a policy for yourself and one for the bank. Yours is good forever if you keep the house. The one for the bank is new each time you refinance.

5. New law on RE commissions just came along, and the industry has been predicting a disaster (for them). Too early to know.

[ASAP]

Originally Posted by Bc2005

1. Conventional loan with 50% down should get a great rate (very low risk to the bank), but banks are a captive to the loan buying and selling process.
They want to be able to sell your loan if necessary, so they follow industry norms for all their loans. A big bank might love to take your big down payment and give you a better rate, but then they may be unable to sell your loan to another bank.
Example - if you put down a very large down payment, and have plenty of cash in the bank, but the loan payment is a higher percentage of your monthly income than their “standard”, they may not want to give you a loan at the best rate.


2. PMI is a standard measure to mitigate risk to the bank.

3. I think you misunderstand LTV. The banks want high value and low loans, so a low LTV.

4. Title insurance is legitimate, but still quite a racket. You buy a policy for yourself and one for the bank. Yours is good forever if you keep the house. The one for the bank is new each time you refinance.

5. New law on RE commissions just came along, and the industry has been predicting a disaster (for them). Too early to know.

1. Not true... i was all the above and didn't qualify for the best rate available.

2. Still doesn't explain it... this is a racket.

3. This doesn't get you the best rate lol... a loan at 90% value was the best rate based on what I was told. In other words, if you put 10% down, you would get a better rate than the guy putting 30-40% down. Numerous lenders told me that.

4. You didn't talk to the issue at hand... your own title policy is not just to protect you but to protect the company doing the title work that you are already paying for. if they miss something... they walk off w 0 penalties lol and you paid for it.

5. At this point, we won't know what it means.

[David70]

Originally Posted by bimmer456

So let me say I know someone who sold a house in San Gabriel, CA for $1 million and then used that money to buy 2 brand new construction houses in Las Vegas. He is renting out the houses for a total of $4000 a month. To me it's not worth it since you have to pay property tax, insurance, HOA, property management. So my estimate is net profit of around $1700 a month and you would have to pay income tax on that so maybe $1300 after tax. That's a whole lot of cash for relatively little in monthly income cash flow. You could just put that $1 million in an annuity and get $5000-$7000 a month with no expenses besides income tax. Or even a high yield savings account will get you around $3300 a month. Not to mention the house he sold must have had a much lower property tax basis so now his property tax may have doubled. And houses in CA are going to appreciate more than in Vegas unless you're talking about the inland empire maybe.

Paid $1m cash for 2 new construction houses, collects $4k a month in rent. Property tax, insurance, HOA and property mgt. take $2300 a month.

New $500k house in an HOA (landlord pays) that rents for $2k a month is crazy low.

If the renter decided to buy the $500k house, put 10% down ($50k), 30 yr. loan on $450k at 6% is $2698 per month, then add HOA, property tax, insurance, maintenance and repair. Renter should never move and instead stay there forever.

Renters option is to stay there for $2k a month or come up with $50k so he can have a house payment of $4k a month?