Posted by Kenneth Hocking on October 24, 2007 at 06:49:13:
My hope is that many of the foreign born concept of financial savings begin to flourish in America…
When I was in the Mobile Home biz I saw 3 families come in and buy One Single wide and then they worked together until all of them owned a singlewide as they got more families in they doubled and tripled up again… That is VERY uncommon for most 2nd and 3rd generation immigrants though…
Qualify the reality of your Investments like PETE - Posted by Truth Teller
Posted by Truth Teller on October 23, 2007 at 10:24:27:
I am coming back to this one item as it is VERY important to consider!
Please provide your answers… as to anything I seem to be missing…
In any market in America today If I were to buy a 450,000 home Owner occupied at 80% first and 20% second 30 year fixed on both
First rate is 6% payment = 2692.47
Second rate is 7.85% payment = 1022.09
What is my Payment for Just Principal and Interest
3714.56 for just Principal and Interest each month…
If you only factor in the LOAN and not taxes and insurance and use a 45% maximum debt to income ratio for the Home Loan with NO TAXES and NO Insurance costs…
You simply take the payment of 3714.56 and divide by .45 and get 8254.56 as a monthly household income needed to support just the LOAN
Now if you add 1% Yearly of Purchase price as property taxes and only 200 a month as insurance with a VERY high deductible
you now change the qualification to 3714.56+375 taxes+200 Insurance and you now HAVE TO qualify with 9,532.36 in income to get the Loan that is Household income of 114,388.27
How many people in your/my market in a “Qualifying Conforming Loan” basis can afford to buy a 450,000 home
I have really began to rethink Where I am investing on this ONE item…
Even if I bought PETE’s house that he owes 650K + on for a 200K short sale…Net price to me of 450K. I could not rent it for what my “qualifying” payment would be…
And how many Households could support that payment in Qualifying terms
It sobbered me up and I THANK Jimmy and Kenneth…Rich and others for the imput…
Run the numbers on your Invetment market against this Qualifying process and then buy well below that number to both sell to Home buyers and to cash-flow for rents
Once you get an idea of how may people can buy at 45% of the average monthly income of the household income and you factor in taxes and insurance… you have a REAL figure of th top end of the Mass market of buyers in your market…
From their you go shopping!
Pete sell you house and take a Loss
Thanks - Posted by Rich-CA
Posted by Rich-CA on October 23, 2007 at 21:35:20:
Its a good way to look at it. There is a reason you have 3 x $65k or more incomes inside the house making payments. Sometimes two or more kids contribute. For the foreign born among us they start with a 50% down payment (at least many of the Chinese immigrants in our circle).