Financing for someone with GOOD credit ? - Posted by Rob MacF

Posted by RR Smith on October 28, 2000 at 11:45:02:

The question you have to ask is not if it is possible to be in that market, but wither it would be profitable to be in it for 3 short years. ~~ Most REI strat. have a long investment horizon (unlike the stock market) LONG TERM is indeed long term (decades). With this in mind you could still cut good terms on the receiving end of a Rent to Own (transferable Lease Option to Buy), which does not require banks or brokers just a good RE lawyer and Title Company.
The surrounding national economy and local state economy CAN NOT be ignored since this will affect your profit picture a great deal. The first two Locations in the location, location, location rule. good Hunting

Financing for someone with GOOD credit ? - Posted by Rob MacF

Posted by Rob MacF on October 28, 2000 at 09:59:51:

Currrently own a townhome in MD … on Golf course … Beautiful view. Will turn into rental property when I move next summer(Military). Looking to buy property in Hawaii at next duty station that will become rental property for me when I leave three years later.
Question is: I have great credit, many other investments, 2 person income, Large downpayment available … what’s the best way to finance a large mortgage in Hawaii that will make rolling it into rental property profitable down the road for someone in my situation? Banks? Brokers? what?

Re: Financing for someone with GOOD credit ? - Posted by Ed S.

Posted by Ed S. on October 28, 2000 at 20:17:28:

From your post, I gather you’re looking at a long-term strategy taken in three-year bites. Good. you have good credit ample savings, and stable income. Double-plus good, because in the long term, going with larger (bank) lenders is cheaper than the smaller outfits.

First, you have to know the rental market for the area you’re moving into. All else being equal, a nice starting point for Hawaii would be:

Now, whether the Fair Market Rents listed there are representative of the neighborhood you’re considering is dabatable–you won’t know until you’re there. But it’s a start.

Second, multiply those rents by 1.09 for inflation, and divide the product by 1.25, to make the bank happy. Divide the bank’s happy number by 1.05 to make you happy. Take the result and plug it into a ‘what’s missing loan calculater’ along with current interest rates, loan term, etc. What will come back is the principal amount of the mortgage you’re considering. Divide that amount by the LTV ratio, and the result will be an offering price that three years from now takes into account rental income and many expenses therewith.

I guarantee the numbers you will get are below market, from a seller’s POV, but hey, you have to protect yourself somehow.