First Time Second Home Buyer - Advice

[Agent Joe]

My plan to purchase a second home in Irvine with cash to house a relative and sublet the other rooms.

My previous agent was a relative who represented me but declined this time to work with me, because she's in LA area.

-Has anyone had experience with Redfin before?
-Has anyone had experiences (good or bad) with subleasing? I don't think subleasing is a thing in Irvine, but I do see a lot of single rooms available.
-Anything else to consider? My first home purchase was through the builder and I did use the in-house lender.

If these items are discussed in other threads, feel free to direct me there.

I can share my experiences here too going through the process, if people are interested.

Thanks for sharing your home purchase experience in Irvine! Just curious, in today's ultra low interest environment, why are you choosing to pay cash? Since you're planning to rent out some rooms, the interest could also help offset your rental income on your tax return.

As for subleasing, that's no different from people renting out rooms, which is pretty common in Irvine. If you're not familiar with screening and managing tenants, I'd recommend hiring a reliable realtor to handle the leasing and possibly property management. This would be more complicated than a standard lease as a bad tenant would not only stress you out but also your relative (even more so actually). Just something to think about.

 

[sleepy5136]

My plan to purchase a second home in Irvine with cash to house a relative and sublet the other rooms.

My previous agent was a relative who represented me but declined this time to work with me, because she's in LA area.

-Has anyone had experience with Redfin before?
-Has anyone had experiences (good or bad) with subleasing? I don't think subleasing is a thing in Irvine, but I do see a lot of single rooms available.
-Anything else to consider? My first home purchase was through the builder and I did use the in-house lender.

If these items are discussed in other threads, feel free to direct me there.

I can share my experiences here too going through the process, if people are interested.

Thanks for sharing your home purchase experience in Irvine! Just curious, in today's ultra low interest environment, why are you choosing to pay cash? Since you're planning to rent out some rooms, the interest could also help offset your rental income on your tax return.

As for subleasing, that's no different from people renting out rooms, which is pretty common in Irvine. If you're not familiar with screening and managing tenants, I'd recommend hiring a reliable realtor to handle the leasing and possibly property management. This would be more complicated than a standard lease as a bad tenant would not only stress you out but also your relative (even more so actually). Just something to think about.

I could be wrong but some people pay cash to win the bidding wars and will eventually get a mortgage after closing escrow.

 

[usctrojancpa]

My plan to purchase a second home in Irvine with cash to house a relative and sublet the other rooms.

My previous agent was a relative who represented me but declined this time to work with me, because she's in LA area.

-Has anyone had experience with Redfin before?
-Has anyone had experiences (good or bad) with subleasing? I don't think subleasing is a thing in Irvine, but I do see a lot of single rooms available.
-Anything else to consider? My first home purchase was through the builder and I did use the in-house lender.

If these items are discussed in other threads, feel free to direct me there.

I can share my experiences here too going through the process, if people are interested.

Thanks for sharing your home purchase experience in Irvine! Just curious, in today's ultra low interest environment, why are you choosing to pay cash? Since you're planning to rent out some rooms, the interest could also help offset your rental income on your tax return.

As for subleasing, that's no different from people renting out rooms, which is pretty common in Irvine. If you're not familiar with screening and managing tenants, I'd recommend hiring a reliable realtor to handle the leasing and possibly property management. This would be more complicated than a standard lease as a bad tenant would not only stress you out but also your relative (even more so actually). Just something to think about.

I could be wrong but some people pay cash to win the bidding wars and will eventually get a mortgage after closing escrow.

Yup, I have a buyer just like that...they can pull cash via their brokerage account (low margin interest) and then will turn around and do a delayed purchase loan on the home (has to be done within 90 days of the purchase to not be considered a cash-out refi).

 

[Cares]

My plan to purchase a second home in Irvine with cash to house a relative and sublet the other rooms.

My previous agent was a relative who represented me but declined this time to work with me, because she's in LA area.

-Has anyone had experience with Redfin before?
-Has anyone had experiences (good or bad) with subleasing? I don't think subleasing is a thing in Irvine, but I do see a lot of single rooms available.
-Anything else to consider? My first home purchase was through the builder and I did use the in-house lender.

If these items are discussed in other threads, feel free to direct me there.

I can share my experiences here too going through the process, if people are interested.

Thanks for sharing your home purchase experience in Irvine! Just curious, in today's ultra low interest environment, why are you choosing to pay cash? Since you're planning to rent out some rooms, the interest could also help offset your rental income on your tax return.

As for subleasing, that's no different from people renting out rooms, which is pretty common in Irvine. If you're not familiar with screening and managing tenants, I'd recommend hiring a reliable realtor to handle the leasing and possibly property management. This would be more complicated than a standard lease as a bad tenant would not only stress you out but also your relative (even more so actually). Just something to think about.

I could be wrong but some people pay cash to win the bidding wars and will eventually get a mortgage after closing escrow.

Yup, I have a buyer just like that...they can pull cash via their brokerage account (low margin interest) and then will turn around and do a delayed purchase loan on the home (has to be done within 90 days of the purchase to not be considered a cash-out refi).

Delayed financing is always a cash out refinance. It is clear in the Fannie and Freddie guidelines that cash out rules and adjustments apply. The 90 day rule is for tax deduction purposes called "acquisition debt".

 

[anteaterscientist]

My plan to purchase a second home in Irvine with cash to house a relative and sublet the other rooms.

My previous agent was a relative who represented me but declined this time to work with me, because she's in LA area.

-Has anyone had experience with Redfin before?
-Has anyone had experiences (good or bad) with subleasing? I don't think subleasing is a thing in Irvine, but I do see a lot of single rooms available.
-Anything else to consider? My first home purchase was through the builder and I did use the in-house lender.

If these items are discussed in other threads, feel free to direct me there.

I can share my experiences here too going through the process, if people are interested.

Thanks for sharing your home purchase experience in Irvine! Just curious, in today's ultra low interest environment, why are you choosing to pay cash? Since you're planning to rent out some rooms, the interest could also help offset your rental income on your tax return.

As for subleasing, that's no different from people renting out rooms, which is pretty common in Irvine. If you're not familiar with screening and managing tenants, I'd recommend hiring a reliable realtor to handle the leasing and possibly property management. This would be more complicated than a standard lease as a bad tenant would not only stress you out but also your relative (even more so actually). Just something to think about.

As I'm a first time second home buyer, I don't think lenders are giving loans for second homes or investment properties may have different rates? I don't know this property's category either because I'm buying a second home to house a relative rent free in one room and rent out the other room to a student or working professional. My primary home will be nearby the second home. Also gotta figure out the tax forms or implications.

 

[sgip]

A true second home is for your "Exclusive part time use and enjoyment" and is never to be rented. Pricing for second homes are equal to primary residences. Some lenders have "mileage restrictions" - as in Current House A must be at least 50 miles away from New Second Home B.

Investment Properties - which your purchase as self described is - will have interest rates at least a half percent or higher than a primary residence home loan and require in some cases more than 25% down.

My .02c

 

[Cares]

I'm seeing some lenders have LLPAs for second homes as well. Not as heavy as investment properties though.

 

[anteaterscientist]

Update!

A unit I was eyeing came back on the market because the previous buyer's loan didn't get approved. The buyer offered 2% above listing.

The seller is entertaining our cash offer at the list price since no offers have been submitted since being back in the market. However, looking at similar previous sales that closed within 2 months, this unit list price is 5% higher. The list price seems a bit high to me.

What to do! I don't want to feel rushed nor am I in a rush.

 

[anteaterscientist]

Update 2!

Also the purchase depends on the ability to modify a bathroom, maybe city permit is involved.

How to research the feasibility of a modification before deciding the purchase a place.

 

[usctrojancpa]

If you have to move any kind of plumbing fixture/piping, you'll need a permit. Why not bring in a plumbing contractor to get a quote?

 

[anteaterscientist]

If you have to move any kind of plumbing fixture/piping, you'll need a permit. Why not bring in a plumbing contractor to get a quote?

Is it common for a contractor to give a quote on a place that is in consideration of being purchased?

I'm still in hypothetical land.

 

[usctrojancpa]

If you have to move any kind of plumbing fixture/piping, you'll need a permit. Why not bring in a plumbing contractor to get a quote?

Is it common for a contractor to give a quote on a place that is in consideration of being purchased?

I'm still in hypothetical land.

Yeah, if you can see the home you can bring a contractor out with you and get a quote for the work.

 

[anteaterscientist]

Another update:

Considering to expand the real estate net... looking for nearby areas surrounding Irvine for a single level 1 bed / 1 bath ... slightly lower price per square foot but similar nice-ness to Irvine.

Any suggestions?

 

[usctrojancpa]

Another update:

Considering to expand the real estate net... looking for nearby areas surrounding Irvine for a single level 1 bed / 1 bath ... slightly lower price per square foot but similar nice-ness to Irvine.

Any suggestions?

Foothill Ranch, Tustin Ranch, Aliso Viejo, and Costa Mesa.

 

[anteaterscientist]

I'm getting discouraged more and more everyday. It's slim pickings and everything is moving fast.

 

[usctrojancpa]

I'm getting discouraged more and more everyday. It's slim pickings and everything is moving fast.

Yeah, it's getting worse and worse out there (lower inventory when it should be increasing).  Not a fun time to be a buyer now.

 

[Cares]

I'm getting discouraged more and more everyday. It's slim pickings and everything is moving fast.

Yeah, it's getting worse and worse out there (lower inventory when it should be increasing).  Not a fun time to be a buyer now.

Like I mentioned in the other interest rate thread. I foresee this to be a very painful summer for buyers especially at entry level. With rates decreasing, more buyers with FOMO seeking to take advantage. Lower rates also means more refinances and people not wanting to sell and give up their low rate.

 

[usctrojancpa]

I'm getting discouraged more and more everyday. It's slim pickings and everything is moving fast.

Yeah, it's getting worse and worse out there (lower inventory when it should be increasing).  Not a fun time to be a buyer now.

Like I mentioned in the other interest rate thread. I foresee this to be a very painful summer for buyers especially at entry level. With rates decreasing, more buyers with FOMO seeking to take advantage. Lower rates also means more refinances and people not wanting to sell and give up their low rate.

New inventory YTD June 2021 in Irvine is about the same what new inventory we had YTD June 2019 (last year was an unusual year) so the problem is the huge buyer demand.  It's not just the low end, it's tough to get buyers a home in the $1m to $2m range as well.

 

[anteaterscientist]

Is this a new thing now: sellers only accepting cash offers and all contingencies waived?
The property that was in serious consideration is a townhome (3/3) built in the 80s.

Is it possible attempt an inspection and backing out if the findings would be too costly to buyer to be OK w/ "as-is"?

 

[usctrojancpa]

Is this a new thing now: sellers only accepting cash offers and all contingencies waived?
The property that was in serious consideration is a townhome (3/3) built in the 80s.

Is it possible attempt an inspection and backing out if the findings would be too costly to buyer to be OK w/ "as-is"?

I've seen plenty of "as-is" counters (meaning that the seller won't do any repairs or provide credits in lieu of repairs) but have not seen an all cash offer and all contingencies waived situation yet. I'd tell my clients to pass.