Author Topic: New Listing - Talise Plan 4 detached condo in Portola Spring (116 Soaring Eagle)  (Read 3583 times)

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Offline Soylent Green Is People

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I was not working with Martin's buyers, so this IS NOT HIS BUYERS SCENARIO. I'm answering the post by @Danimal

A $2m home with 30% down is about $9,000 per month (PITIHOA) assuming an average 4.5% rate.

Two buyers each with $150kpy incomes, assuming 40% tax burden, brings home about $15,000 net per month. After the mortgage, that leaves $6,000 to spend on utilities, car, car insurance, gas, streaming services, food, etc. It's not a thin margin by any means, but it's not wide enough to give room for error. There may be some RSU or bonus income that comes into play but it can't be relied upon.

If one of two buyers has the rug pulled out from under them, yes it's a pretty risky scenario.

Lenders unfortunately will focus on "Gross Income" for qualifying. It's the Net Income that needs to be the real decision driver. I ask my buyer clients who are just starting to look at their home purchase plans to start "paying" their mortgage now to build financial muscle memory. Example - if rent is $5,000 and Mortgage is $7,000, every time a $5,000 rent check is paid, also put $2,000 in the bank. This does help a buyer get used to the new payment, it builds savings, and demonstrates to an Underwriter that indeed a buyer with tight ratios can make the payment.

My .02c
« Last Edit: June 29, 2022, 03:15:03 PM by Soylent Green Is People »
My .02c

SGIP

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Offline msuum

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I am sure Martin will sell it again.

Offline USCTrojanCPA

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Buyer's wife got laid off so the buyer won't be able to qualify for the loan to purchase the home so it's back on the market.

Bank of Martin can't loan them the money?


Haha  I have already committed capital to help 2 other clients and I only provide short term liquidity plus my interest rates if I were to be a lender would be very high.
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Offline USCTrojanCPA

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Seller owns the home free and clear and will just rent it for a few years if they don't get the price they want so not a hugely motivated seller that needs to sell.
Martin Mania, CPA
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Offline Danimal

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I am sure Martin will sell it again.

Definitely house will be sold w/o any issue under Martin. It just amazes me that some buyers are pushing the envelop to get a home they can barely afford especially paying a premium for home with views.

Offline The California Court Company

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Seller owns the home free and clear and will just rent it for a few years if they don't get the price they want so not a hugely motivated seller that needs to sell.

the sellers missed the peak pricing, not sure if there was a slightly lower all cash offer but thats why all cash matters. for example all cash may be 1% lower but if you miss the peak pricing you could lose more than that 1%.
"Should any Person come into contact with such fruit, soil or groundwater, such Person is advised to wash thoroughly with soap and water and seek immediate medical attention"-Augusta Disclosure, Tustin Legacy

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Offline OCtoSV

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I am sure Martin will sell it again.

Definitely house will be sold w/o any issue under Martin. It just amazes me that some buyers are pushing the envelop to get a home they can barely afford especially paying a premium for home with views.

Wait a minute - I thought Irvine buyers are strong. First it goes into escrow under asking them it falls out after a layoff because these “strong” buyers required 2 incomes to barely qualify, until they couldn’t. You’re going to see this scenario repeated as often as Larry used to find Irvine buyers to profile  that went belly up. The OC buyer pool will dry up. What remains to be seen is how much must sell inventory comes on the market over the next 2 years as mortgage rates march to 10%. Powell talks in very hawkish terms.

For the record, I hope I’m wrong. I don’t want to see anyone experience negative financial outcomes but my knowledge and experience are guiding my opinions.

Offline The California Court Company

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exactly. it sounds like the buyer couple stretched to buy and seller wanted maximum price that is financed offer. hopefully the buyer waived financing contingency and the seller kept the deposits.

I am sure Martin will sell it again.

Definitely house will be sold w/o any issue under Martin. It just amazes me that some buyers are pushing the envelop to get a home they can barely afford especially paying a premium for home with views.

Wait a minute - I thought Irvine buyers are strong. First it goes into escrow under asking them it falls out after a layoff because these “strong” buyers required 2 incomes to barely qualify, until they couldn’t. You’re going to see this scenario repeated as often as Larry used to find Irvine buyers to profile  that went belly up. The OC buyer pool will dry up. What remains to be seen is how much must sell inventory comes on the market over the next 2 years as mortgage rates march to 10%. Powell talks in very hawkish terms.

For the record, I hope I’m wrong. I don’t want to see anyone experience negative financial outcomes but my knowledge and experience are guiding my opinions.
"Should any Person come into contact with such fruit, soil or groundwater, such Person is advised to wash thoroughly with soap and water and seek immediate medical attention"-Augusta Disclosure, Tustin Legacy

"You'll probably be able to buy a 4BR detached home in Quail Hill for $150,000."-IndieDev

Offline Soylent Green Is People

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Don't get me wrong here.The buyers could afford this purchase but the risks with job instability was too great. This happens all the time, during recession or plenty.
My .02c

SGIP

Offline qwerty

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I was not working with Martin's buyers, so this IS NOT HIS BUYERS SCENARIO. I'm answering the post by @Danimal

A $2m home with 30% down is about $9,000 per month (PITIHOA) assuming an average 4.5% rate.

Two buyers each with $150kpy incomes, assuming 40% tax burden, brings home about $15,000 net per month. After the mortgage, that leaves $6,000 to spend on utilities, car, car insurance, gas, streaming services, food, etc. It's not a thin margin by any means, but it's not wide enough to give room for error. There may be some RSU or bonus income that comes into play but it can't be relied upon.

If one of two buyers has the rug pulled out from under them, yes it's a pretty risky scenario.

Lenders unfortunately will focus on "Gross Income" for qualifying. It's the Net Income that needs to be the real decision driver. I ask my buyer clients who are just starting to look at their home purchase plans to start "paying" their mortgage now to build financial muscle memory. Example - if rent is $5,000 and Mortgage is $7,000, every time a $5,000 rent check is paid, also put $2,000 in the bank. This does help a buyer get used to the new payment, it builds savings, and demonstrates to an Underwriter that indeed a buyer with tight ratios can make the payment.

My .02c

300k a year for this mortgage would be tight from a practical perspective. Especially if they were maxing out retirement contributions. The 15k net per month becomes more like 13k per month, leaving 4K for all expenses. If you have two working parents with two kids daycare will likely eat up at least 1,500/month (unless family is watching them) then you are down to 2,500 month for all other expenses. Between bonus and equity perhaps they gross another 150k (although people who make $150k per year generally don’t have bonuses and equity that add up to 50% of their salary) per year but I would never rely on those payouts to buy a $2M home, perhaps I’m just too conservative

Offline OCtoSV

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I was not working with Martin's buyers, so this IS NOT HIS BUYERS SCENARIO. I'm answering the post by @Danimal

A $2m home with 30% down is about $9,000 per month (PITIHOA) assuming an average 4.5% rate.

Two buyers each with $150kpy incomes, assuming 40% tax burden, brings home about $15,000 net per month. After the mortgage, that leaves $6,000 to spend on utilities, car, car insurance, gas, streaming services, food, etc. It's not a thin margin by any means, but it's not wide enough to give room for error. There may be some RSU or bonus income that comes into play but it can't be relied upon.

If one of two buyers has the rug pulled out from under them, yes it's a pretty risky scenario.

Lenders unfortunately will focus on "Gross Income" for qualifying. It's the Net Income that needs to be the real decision driver. I ask my buyer clients who are just starting to look at their home purchase plans to start "paying" their mortgage now to build financial muscle memory. Example - if rent is $5,000 and Mortgage is $7,000, every time a $5,000 rent check is paid, also put $2,000 in the bank. This does help a buyer get used to the new payment, it builds savings, and demonstrates to an Underwriter that indeed a buyer with tight ratios can make the payment.

My .02c

300k a year for this mortgage would be tight from a practical perspective. Especially if they were maxing out retirement contributions. The 15k net per month becomes more like 13k per month, leaving 4K for all expenses. If you have two working parents with two kids daycare will likely eat up at least 1,500/month (unless family is watching them) then you are down to 2,500 month for all other expenses. Between bonus and equity perhaps they gross another 150k (although people who make $150k per year generally don’t have bonuses and equity that add up to 50% of their salary) per year but I would never rely on those payouts to buy a $2M home, perhaps I’m just too conservative

The only good thing here is underwriting rules prevented these folks from making a financially ruinous decision. The detached condo is a product developed specifically to soak profligate buyers such as these 2 - shiny on the surface but worthless underneath.

Offline The California Court Company

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I am very fiscal conservative. My rules:
1. PITI plus HOA needs to be on par with equivalent rent or cheaper.

2. Monthly payment can be supported by the lowest single income level for a dual income household.

3. Have enough liquid assets in reserve that can pay off the principle any time if I feel like.
"Should any Person come into contact with such fruit, soil or groundwater, such Person is advised to wash thoroughly with soap and water and seek immediate medical attention"-Augusta Disclosure, Tustin Legacy

"You'll probably be able to buy a 4BR detached home in Quail Hill for $150,000."-IndieDev

Offline Irvinehomeseeker

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I am very fiscal conservative. My rules:
1. PITI plus HOA needs to be on par with equivalent rent or cheaper.

2. Monthly payment can be supported by the lowest single income level for a dual income household.

3. Have enough liquid assets in reserve that can pay off the principle any time if I feel like.

You must be a very rich person to he able to do so,atleast for Irvine prices!

Offline Danimal

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I am very fiscal conservative. My rules:
1. PITI plus HOA needs to be on par with equivalent rent or cheaper.

2. Monthly payment can be supported by the lowest single income level for a dual income household.

3. Have enough liquid assets in reserve that can pay off the principle any time if I feel like.

You must be a very rich person to he able to do so,atleast for Irvine prices!

Not sure about rich but racist for sure.

Offline CalBears96

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I am very fiscal conservative. My rules:
1. PITI plus HOA needs to be on par with equivalent rent or cheaper.

Yeah, that's not happening. If that's the case, all the homes will become rentals.

 

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