Investment Condo - Advice - OC/LA or AZ/CO/TX? 420K Budget

dream16

New member
Guys, as some of the members already know me here, i bought a tri-level attached condo in Portola springs (winter 2016) and i am under negative cash flow of around 5-6 k/year despite renting it out.  :-[ :-[

Now, i am all the way on east-coast in Manhattan area and have been looking to invest to buy another condo or townhouse property - solely for rental purposes.  >:D

1. As this will be a 2nd home purchase, the lowest investor interest rate i have heard so far is 4% on traditional 30 yr fixed mortgage?

1a) I just have a single income <100k , would bank consider giving me loan of 336K since i already have a 400k pending loan on 1st home - which has been rented out, but i still loose around 5-6k/year on it?

1b) Will bank consider equity built in existing condo? I think its around 30-40k (zip code 92618).

1c) Will bank consider that the property is rented out and is generating rent every month?


1d) I live in a rental myself and through some independent arrangements, someone else pays my $2575 monthly rent. A private lender might be a better bet for me to get another loan?

1e) MY FICO = 820 and going up more ;D ;D

1f) I remember bank looking at Debt-to-Equity Ratio: which is basically that a person can afford 3 times the monthly income? I forgot the exact word, but for example if someone makes 90k, they can qualify up-to 270k loan?

1g) I have all W2's and everything to prove that i have always been working.

2. As my max budget is 420k, with 20% down = 84K, i am looking at around $1600/mo (P&I) + $300 (HOA) and depending on the state/city i buy in = will have taxes calculated = so overall it can range from 1900+ CA Tax ($6300/year) or 1900+ NJ Tax ($10,500/year) or TX or CO Tax or AZ Tax depending on where i buy? Is this a smart decision to buy? Market is on a crazy bull run since 2013 now with no sights of tanking.

3. Considering my scenario, what would you guys suggest? My eventual 2-3 year goal is to move back to So CA for good, so buying locally within So CA or AZ or Nevada might be better? I understand that i have to worry about property management costs which can run upto $2500/year if i buy property out-of-state. Other worries can be bad tenants/evacuation procedures. That's why i am avoiding to buy anything in college towns and only want to rent it out to educated-stable families.

4. Again Just like Irvine, i am trying to buy either a brand-new built or 5-7 year old built property in excellent school district - such as Nutley, NJ or Edison, NJ or Chandler, AZ or it can be me hunting for something in OC - Lake Forest? Or i don't know what i can buy in 420k budget where i can get a break-even by renting it out?

I don't want to have dollars stinking into bank accounts and stocks/bonds/gold isn't my forte. So i need to invest.

Experts - please share your insights and advise, as always really appreciate all your help from all the amazing members on this forum.
 
WTTCHMN said:
dream16 said:
I live in a rental myself and through some independent arrangements, someone else pays my $2575 monthly rent.

Sugar mama?

Nope, there ain't any free lunches or free Popsicle in this world, i do side-businesses which are not on my name yet, so technically have to get my payout somehow.
 
It sounds like your first condo is bleeding money.  Why would you want more investments like that?

The lender will consider 3/4th of the rent on your first condo after you've had 12 months of rental history.  With a new condo purchase, they won't consider any rental income, so you will need to qualify based on your work income.  You will also need 25% down for most investment loan programs.

Honestly, until your first rental is seasoned enough (12 months) I don't think you can qualify for a second one.  Even once they start to count that rental income (3/4th), I don't think you're going to qualify for more than a $225k loan, so your max budget is about a $300k condo.  You may have no choice but to buy in AZ/CO/TX.
 
dream16 said:
WTTCHMN said:
dream16 said:
I live in a rental myself and through some independent arrangements, someone else pays my $2575 monthly rent.

Sugar mama?

Nope, there ain't any free lunches or free Popsicle in this world, i do side-businesses which are not on my name yet, so technically have to get my payout somehow.

Side business?
 
What are you doing all the way in NYC? (Wall Street?)

I thought you were at Silicon Valley.

dream16 said:
Guys, as some of the members already know me here, i bought a tri-level attached condo in Portola springs (winter 2016) and i am under negative cash flow of around 5-6 k/year despite renting it out.  :-[ :-[

Now, i am all the way on east-coast in Manhattan area and have been looking to invest to buy another condo or townhouse property - solely for rental purposes.  >:D

1. As this will be a 2nd home purchase, the lowest investor interest rate i have heard so far is 4% on traditional 30 yr fixed mortgage?

1a) I just have a single income <100k , would bank consider giving me loan of 336K since i already have a 400k pending loan on 1st home - which has been rented out, but i still loose around 5-6k/year on it?

1b) Will bank consider equity built in existing condo? I think its around 30-40k (zip code 92618).

1c) Will bank consider that the property is rented out and is generating rent every month?


1d) I live in a rental myself and through some independent arrangements, someone else pays my $2575 monthly rent. A private lender might be a better bet for me to get another loan?

1e) MY FICO = 820 and going up more ;D ;D

1f) I remember bank looking at Debt-to-Equity Ratio: which is basically that a person can afford 3 times the monthly income? I forgot the exact word, but for example if someone makes 90k, they can qualify up-to 270k loan?

1g) I have all W2's and everything to prove that i have always been working.

2. As my max budget is 420k, with 20% down = 84K, i am looking at around $1600/mo (P&I) + $300 (HOA) and depending on the state/city i buy in = will have taxes calculated = so overall it can range from 1900+ CA Tax ($6300/year) or 1900+ NJ Tax ($10,500/year) or TX or CO Tax or AZ Tax depending on where i buy? Is this a smart decision to buy? Market is on a crazy bull run since 2013 now with no sights of tanking.

3. Considering my scenario, what would you guys suggest? My eventual 2-3 year goal is to move back to So CA for good, so buying locally within So CA or AZ or Nevada might be better? I understand that i have to worry about property management costs which can run upto $2500/year if i buy property out-of-state. Other worries can be bad tenants/evacuation procedures. That's why i am avoiding to buy anything in college towns and only want to rent it out to educated-stable families.

4. Again Just like Irvine, i am trying to buy either a brand-new built or 5-7 year old built property in excellent school district - such as Nutley, NJ or Edison, NJ or Chandler, AZ or it can be me hunting for something in OC - Lake Forest? Or i don't know what i can buy in 420k budget where i can get a break-even by renting it out?

I don't want to have dollars stinking into bank accounts and stocks/bonds/gold isn't my forte. So i need to invest.

Experts - please share your insights and advise, as always really appreciate all your help from all the amazing members on this forum.
 
Why not selling your Willow condo and go for something else?

Value has not increased much but you would still end up ahead I think.
 
Sometimes the best thing to do is to do nothing.  (although I would sell a cash flow negative rental ASAP) 
 
Liar Loan said:
It sounds like your first condo is bleeding money.  Why would you want more investments like that?

The lender will consider 3/4th of the rent on your first condo after you've had 12 months of rental history.  With a new condo purchase, they won't consider any rental income, so you will need to qualify based on your work income.  You will also need 25% down for most investment loan programs.

Honestly, until your first rental is seasoned enough (12 months) I don't think you can qualify for a second one.  Even once they start to count that rental income (3/4th), I don't think you're going to qualify for more than a $225k loan, so your max budget is about a $300k condo.  You may have no choice but to buy in AZ/CO/TX.

Thanks - your argument makes sense. My condo has been rented out for more than a year - so I have the option of lender consider 75% of rental amount I get. But you are saying for a second condo investment - lender isn?t going to consider it?
I have been getting rents for 15 months now.
I can arrange 25% down payment.

As per your maths, if my max loan amount is 225K, then for 300k - my only choices are everything else other than California.

Thanks - appreciate your insights.

Also, I want to avoid investment like my first one but since I will be moving back to Southern California in near future for good, I was contemplating the option of keeping all my rentals close to where I will be living to be able to manage them rather than paying property management companies
 
marmott said:
Why not selling your Willow condo and go for something else?

Value has not increased much but you would still end up ahead I think.

At 5% selling costs on a 550k purchase price = $27,500 will be lost in that alone. I am not sure if same portola spring - willow condos are being sold for 600k now

Goal is to keep raising rent every year - $100/year is what most manage to and Then eventually bleeding will reduce in next 2-3 years
 
USCTrojanCPA said:
Talk to Panda and buy something in Hotlanta or look at Texas.

Really ? Is Atlanta worth it? Let me start my research on what I can scoop up for a break even or a positive cash flow rental investment there - any insights will be highly appreciated
 
hello said:
Sometimes the best thing to do is to do nothing.  (although I would sell a cash flow negative rental ASAP)

And then do what exactly with that money? Thing is I am emotionally attached and obsessed with Irvine - so if I sell and move out now - I am not sure if I will be able to scoop up a 1600 Sq ft attached tri level condo in there again for 550k in next 5 years
 
How about refinancing your current condo with all of the extra cash you have so you're closer to 50% LTV?  Should be cash flow positive and maybe get in at a lower interest rate than 1.5 years ago?
 
Kings said:
How about refinancing your current condo with all of the extra cash you have so you're closer to 50% LTV?  Should be cash flow positive and maybe get in at a lower interest rate than 1.5 years ago?

But I want to use that cash for second condo or townhouse purchase in Austin, Tx or chandler, AZ !

I got it at 3.75 fixed 30 year rate and putting in another 85k down on a 410k pending loan amount doesn?t make sense to me.

I want to diversify my options

I forgot what LtV is : can u plz explain it again? I believe I was at 43% - not sure if it was sent to equity ratio or some other banking term
 
Burn That Belly said:
What dream16 is trying to say is that he's a stripper. That's why his income is so low on paper but in reality he's got twice as much cash that he earned moonlighting. He needs to slowly launder it back into the system without paying uncle sam the 30%.  ;D

Lol

I am just taking a guess? Side business (massages, IT services, eletrical work)

I am only available on weekends. But my rates are the best.


Living in Manhattan is not cheap. I had a family member that had to rent a separate place to park her car.  That being said, dream16 do you live in NYC or do you commute into the city?


 
dream16 said:
I forgot what LtV is : can u plz explain it again? I believe I was at 43% - not sure if it was sent to equity ratio or some other banking term

Advice?  Slow your roll.  Your first investment is losing $6k a year and you're looking to buy in the same area AGAIN, at a point in time when ROIs are at a historical low.  This should be considered speculation, not investing.  Atlanta and Texas are the best bits of advice you've gotten.  You actually have a chance of making money from the get-go in those locations.
 
So you said stocks are not your thing, real eastate doesn?t seem to be your thing either :)

Nothing wrong with being patient and having cash in the bank

But good luck.
 
qwerty said:
So you said stocks are not your thing, real eastate doesn?t seem to be your thing either :)

Nothing wrong with being patient and having cash in the bank

But good luck.

Cash in the bank can be a good thing.

Real Estate is higher leveraged, is more costly and takes much longer to unwind than stocks.

OTOH no matter what Trump does with SALT/Mortgage deductions, seems like his interest/property tax deductions are "safe" from being eliminated.

So what I would say is............... can you tolerate (afford) a scammer who doesn't pay the rent for a lonnnnnnng time? In California it's costly and not quick to evict someone. Yes, I know the chances are low but you're already losing on one place and you wouldn't be living in either one.
 
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