Is it Time to Buy, or Time To Sell?? (Phoenix: renters, credit)

[ArizonaMother]

I am afriad that Aug 2010 comes or even before and ok lets say market is good... right now a house just like mine sold for $160 and i owe $203k i am on an interst only adj rate Aug 2010... so lets say i stay-- market does good and it is about what i owe, if it doesnt sell im still going to end up in foreclosure/shortsale cuz my payment will go up to $1700 a month since ill have to pay principle now... and how can i refi if the house is worth 40k less then what i owe? i have no equity and owe the same as my original mortgage...

secondly, my thought process was this... get of this house MY CREDIT IS GOOD) so a short sale i under stand will hurt it, but thinking if my husband buys ( but not sure he can qualify on his own) buys one in Queen creek cause cant afford anything else-- its a bigger house for less, ( however if i am 1099 on the other house then sure i pay taxes on lets say $40k but im not in COMPELTE foreclosure but still have a mortgage payment of what i have about now ina NEW bigger home...

my conerns... 2010 comes house goes for great price but i cant afford to buy another cuz the market is selling so high--- or vice versa

or 2010 comes house' are about the same and either way i am not able to pay after the adjust and increase in payment

[Captain Bill]

Originally Posted by ArizonaMother

The mortgage is in my name ONLY-- i thought if i could take husband off TITLE-- then he can buy a house and i wouldnt have anything to do with it--- we are out of room and looking for a new build bigger home I cant even move around in this house now--- I was going to ask about a title leui of foreclosure( however it is called) from my mortgage company cuz if i wait 2 more years and the market gets up a bit im 40k at least under right now and if it does go up then i wont be able to buy another--- im ina catch 22 i guess

I am a stay at home mom no job right now cuz of day care prices so thats my hardship

AM, I'm going to give you some straight talk that you may not like to hear, but you need to hear it. I suggest you verify what I'm saying with the proper professionals before you get yourself into serious legal trouble.

That means discussing your plans and options with an attorney, and with a reputable mortgage broker.

• If you can make your payments you do not have a hardship in the lenders eyes.

• If you are a stay at home mom because of day care being too expensive, they will not consider that a hardship

• If you want to buy a larger home simply because you've run out of room, and cause the lender to lose their investment, they will certainly not consider that a hardship.

• If you plan to attempt a short sale with a lender with the property in your name, while at the same time buy a larger home under your husbands name, that could, and my guess it probably would, be considered loan fraud.

• Everyone is looking very closely at loan fraud today and if you attempted this, it is possible that you could be charged with loan fraud.

• The lender for the house you would purchase has the right to check the credit of both husband and wife to veryify the assets and credit rating. The can elect to give higher weight to the spouse that has the highest score. However, when they discover that you just had a foreclosure, short sale, of deed in lieu of foreclosure, the investigation wheels will probably start turning, and you could be in BIG trouble.

• In order to do a short sale, you must have your home listed with a realtor. Then you must stop making payments, or they will not talk to you. Then when there is an offer, the realtor will have to submit the short sale package, which includes the offer, the hardship letter, and other documents, to the lender.

• As a realtor, I would never take a listing such as this, nor would I submit a short sale package such as this to a lender under the circumstances that you describe, because then I could be implicated in a loan fraud scheme and face a felony jail sentence and a loss of my license. I don't want to end up in Sheriff Joe's hotel or any other prison.

I suggest you take my earlier advice and get your home refinanced with a 30 year fixed loan, and plan to make do with the space that you have. If you continue to consider the plan you describe, then you need to consult with a real estate attorney.

Bill

[altus2006]

Good post, Captain Bill.

I am in total agreement with you.

altus2006

[Ponderosa]

Great Post, Bill. I have been holding my tongue with this turn in the thread. I am somewhat astonished at how blithely one can turn their back on their obligations, their word, their good name and reputation and cheat the lender because they want a bigger house and the market is not right at the moment.

[sheena]

Originally Posted by Captain Bill

AM, I'm going to give you some straight talk that you may not like to hear, but you need to hear it. I suggest you verify what I'm saying with the proper professionals before you get yourself into serious legal trouble.

That means discussing your plans and options with an attorney, and with a reputable mortgage broker.

• If you can make your payments you do not have a hardship in the lenders eyes.

• If you are a stay at home mom because of day care being too expensive, they will not consider that a hardship

• If you want to buy a larger home simply because you've run out of room, and cause the lender to lose their investment, they will certainly not consider that a hardship.

• If you plan to attempt a short sale with a lender with the property in your name, while at the same time buy a larger home under your husbands name, that could, and my guess it probably would, be considered loan fraud.

• Everyone is looking very closely at loan fraud today and if you attempted this, it is possible that you could be charged with loan fraud.

• The lender for the house you would purchase has the right to check the credit of both husband and wife to veryify the assets and credit rating. The can elect to give higher weight to the spouse that has the highest score. However, when they discover that you just had a foreclosure, short sale, of deed in lieu of foreclosure, the investigation wheels will probably start turning, and you could be in BIG trouble.

• In order to do a short sale, you must have your home listed with a realtor. Then you must stop making payments, or they will not talk to you. Then when there is an offer, the realtor will have to submit the short sale package, which includes the offer, the hardship letter, and other documents, to the lender.

• As a realtor, I would never take a listing such as this, nor would I submit a short sale package such as this to a lender under the circumstances that you describe, because then I could be implicated in a loan fraud scheme and face a felony jail sentence and a loss of my license. I don't want to end up in Sheriff Joe's hotel or any other prison.

I suggest you take my earlier advice and get your home refinanced with a 30 year fixed loan, and plan to make do with the space that you have. If you continue to consider the plan you describe, then you need to consult with a real estate attorney.

Bill

Hats off to the Captain.

[rksrl]

Hi all,
thanks for help with previous queries.
I am considering a move to Phoenix.What is the best way to design a real estate portfolio for cash flow?I am a carpenter so single family homes,multi-family,fixers or good condition are all options.
Depending on what I own now would sell for I probably would have enough to buy two cheaper fixers or one larger investment but would hope to stay in the game after capital is invested.Difficult I know.
I hope there are some landlords or investors who can give advice.All opinions appreciated.

[Captain Bill]

Originally Posted by rksrl

Hi all,
thanks for help with previous queries.
I am considering a move to Phoenix.What is the best way to design a real estate portfolio for cash flow?I am a carpenter so single family homes,multi-family,fixers or good condition are all options.
Depending on what I own now would sell for I probably would have enough to buy two cheaper fixers or one larger investment but would hope to stay in the game after capital is invested.Difficult I know.
I hope there are some landlords or investors who can give advice.All opinions appreciated.

rksrl, single family fixers may be a great way to get started before entering the multi-unit arena. You could buy one fixer and live in it while you're fixing it up. If you live in it for 2 years out of the last 5, you will have a $250,000 federal income tax exmption for each of you and your spouse when you sell the home.

If you want to do two at once, then for the second property you could fix it right away, while living in the first one, and rent it out. The lower end properties will normally bring in more rent per square foot.

You would want to buy in a good location and plan to hold the properties for a couple of years because of the current market conditions.

Our office passes out lists of wholesale properties to the agents. Some of the agents who are also agents will ocassionally buy one, and agents who have investor clients pass these along to their clients. I work with a couple of investor clients. Many of these properties never make it to the mls. Some are fixers and some are ready to move in. There are a lot of properties for sale, and today there are a lot of bargains, and a lot of investors are buying them.

It would be risky to consider fix and flip in a short period of time because of the market still being in a decline. It can be possible if you get a bargain and are able to fix it up quickly yourself for a reasonable price. At any rate, in my opinion it's a great time to be building a portfolio. You need to sit down and talk with someone to outline some objectives.

[rksrl]

Captain Bill,
that makes a lot of sense.Going forward my main objective would be to make sure every investment would be cash flow positive.I don't know if thats realistic but if it is there probably would not be huge paydays but it would be hard to lose money.
I like to look for investments myself but from your comments it seems it would be beneficial to have a good relationship with an agent.
Can the exemption be applied to two properties at the same time.Its very tempting to invest using the exemption but it must be disruptive to normal family life.

[Captain Bill]

Originally Posted by rksrl

Captain Bill,
that makes a lot of sense.Going forward my main objective would be to make sure every investment would be cash flow positive.I don't know if thats realistic but if it is there probably would not be huge paydays but it would be hard to lose money.
I like to look for investments myself but from your comments it seems it would be beneficial to have a good relationship with an agent.
Can the exemption be applied to two properties at the same time.Its very tempting to invest using the exemption but it must be disruptive to normal family life.

rksrl, the exemption is only for your primary residence, which you must live in for at least 2 out of the past 5 years.

It's difficult to get positive cash flow unless you make a sufficient down payment to get the mortgage payment low enough.

A good realtor can help you run the numbers, until you learn how to do it. But you do need someone that works with investors. They can help you locate the properties that will make sense for you. You first need to know that the agent knows what s/he's doing and that you can trust them.

You should also have an accountant to verify the numbers for you.

When buying investment properties that are not on the market by a seller, such as through wholesalers or foreclosed properties, you will have to pay the commission. If you have a good agent, that commission will be small compared to the assistance you will be getting. You will be able to work a continuing relationship with him so that he will be able to work with you on an ongoing basis with a fee structure that makes sense for the both of you. Both of you have to be able to make money, otherwise it won't work.

Here are a couple of books that may be of help to you. there are many others.
Entrepeneur's Great Big Book on Real Estate Investing by Stuart Leland Rider; Entepreneur Press ISBN 1-932531-51-3

Mastering Real Estate Math by Ralph Tamper; Dearborn Real Estate Education; You can google for the company and order it from there if you can't find it elsewhere.

[rksrl]

That was my thinking about down payment.Of course if I put too much down the program has to go on hold.
Have not come accross those books,they sound good,businesslike.I intend to read them.
Thanks