I need your guidance

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wendyinoc_IHB

wendyinoc_IHB

New member
Your all are so smart so I wanted to get your advice. I just got approved for a low income loan. I am just at the income limit of $86K. If I wait till next year I will be over the limit so I won't qualify. The loan is 100% financing, .375 margin (cap8%), no Mortgage Insurance. The rate currenlty is at 5.012%. I know the market will come down but this is such a good loan program.

Here is the negative the max you can get is $300K. I can go over $300K with a down payment. I found this 1 bedroom for $320K.

MLS #: P588034

Will I be able to make this a rental in the future? Say about 2 years?? Is $320K to much for a 1 bedroom??
 
wendyinoc,

Ask yourself how much you could rent this 1 bedroom for. If it doesn't cover your payment, taxes, insurance, etc. (which it won't in this market), then it is too expensive. Don't be surprised to see the prices on 1 bedrooms cut in half over the next 3 to 5 years -- maybe more as many, if not most, of these units were purchased with 100% financing. People with 100% financing tend to walk when they go underwater. That puts a lot of downward pressure on prices.

In short, don't do it. There will be better deals in the future.
 
Wendyinoc,

When you get a government loan there are many covenants to it. It wouldn't be a CALCHFA loan would it? If so you can't rent it out after two years anyway or they will call the loan due payable now. Plus in some of the government loans if you do rent it or sell it before the loan states you can then they will take a percentage of the equity. It's a great rate but can you handle 8%? Do you know if it is based on the LIBOR because the current rate doesn't match where rates are at?

Plus a one bedroom is difficult to sell in an up market let alone a slow one.
 
"Low income loan"....and you make around 85K a year. Can I just say that this is a sad state of affairs ? That someone making that much money is considered "low income".....sheesh.

Wendy. Wait my dear....it will pay off.
 
Wendy,

Aside from all the complications, to rent such a place would likely cost you 1400 a month, to BUY such a place would probably push you into the 2500-3000 a month. So if you ever wanted to rent it out you'd have to come up with something like 100k down on the loan to make it break even. It just depends, what is your goal?

-bix
 
one bedroom / one bath is very hard for resell...also, when you rent those out, the person who usually rents 1/1s are more likely to cause you trouble.

My suggestion: don't don't it...
 
Wendy:

BTW, can you tell you how do you qualify for a low income loan? My nanny is in the process of looking for a 2/2 in Irvine...her kids are in college..and they have no plans to move out of here...they just sold their current codo(1/1, takes more than a year!) , and looking to buy if they can find the right property with the right price. Does low income loan only apply for first time home buyers?

Any guiance will be greatly appreciated...If anyone else can provide someinput will be great too!
 
Wendy:

The short answer is, no, it's not a good income property because the numbers won't work.

I'm reading the MLS listing and it says the unit comes with carport space but not garage? Besides the golf course, the location isn't that special, unless if you work close to it and it'd save you time and money on commute. If I may ask, what city do you work in, and why did you pick this specific location (Tustin)?

I think, if you're willing to wait, you can find much better properties for less $$ within the next few years. Also, if you're accepting subsidized loans, check the terms carefully to see what the home owner residency requirement is, and if there are any prohibitions on using it as a rental/income property.
 
irvine-123 This is a first time buyer loan. The main deal is you can't make over 86 and the loan can't be more then $300K.

momopi-I work in Laguna and my boyfriend works in Cypress. Its a happy medium. Also I love this complex. Nice location to shopping.

The price is down to 04 from what I can tell. You really think it can drop more on the low end properties? In 1999 it was at $100K. How much really could this property be in say two years?
 
At the present sales/inventory ratio, the low-end properties have about a 1 in 10 chance of selling on any given month. In order for a seller to connect with a buyer, they either need to have a very special property (bzzt - we're talking about condos here) or they need to have a very special price. Sales at these special prices become comparables for future transactions. Lather, rinse, repeat.

There's little to no evidence that we're anywhere near the bottom, in any segment of the market. The trends are still pointing to negative appreciation... ALL of them.
 
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