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Originally Posted by XLexusTech
Vegas... I wouldn't ask this is the answer was not really important to me... did you get an investment or Traditional mortgage? I have a rental that is underwater and just about even..(income to expense annually). I cant refi because I haven't lived in in 3 of the last 5 years... Well I can but only as in investment loan which is not favorable... so if you know a way out i would love to learn...
I thought about putting the property into an LLC and letting it go.. I doubt it will ever be very heavy cash positive without a favorable refi...
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I purchased the property with an investment loan. I did pay 2 points to get that rate. Your Loan to Value is your biggest problem. The higher LTV, the more risk the lender assumes. What type of loan do you have currently? FHA, VA, Conv (Fannie/Freddie or Private?) Does it adjust or have a balloon?
Depending on your financial position and negative equity, a short sale may be beneficial. I'd certainly do that before suffering a foreclosure. A talk with an asset protection attorney and cpa would be your first steps. The laws are different than Nevada. The LLC won't protect you as the loan is in your personal name. You can only change how you hold title. Then research an agent that has a proven track record of closing short sales.
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Originally Posted by sik68
That is a sweet deal. It's impressive to be so cash flow pos. without a lot of money down.
Is it common to find houses where the mortgage is significantly less than the rental market price? Do the renters of these places tend to be those that were put out by the housing crash?
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It's really a unique recipe. Our market over corrected due to the bubble burst. Team that with all time low interest rates and displaced homeowners that have suffered a foreclosure/short sale and this is the result.
The margin between ownership and leasing can't be this wide forever. Our prices are increasing rapidly(21.5% in one year) and rates have been inching up. That will do two things: Reduce investor ROI and primary residence affordability. The margins will shrink and vacancy will rise as investors decide to move their money out of our market. I expect a rent decrease down the road but I have lot's of insulation and my properties are always at the top of the heap. I'll have then rented as long as the lights are on downtown.
I really feel like it's a once in a lifetime opportunity to capitalize on low prices AND interest rates at the same time. Investors agree as we(our market) have many hedge funds picking up 50 properties at a time all cash. While I feel our market is getting investor heavy, a majority of the sales over the last 2-3 years have been all cash, heavy down, or highly qualified. The foundation of ownership will be solid this time around. I do see a hiccup coming in 6-12 months when sale inventory increases and interest rates rise. I do see the individuals that have suffered short sales/foreclosures getting back in the market as buyers about the same time the investors start to wane.
I've been wrong before but these investments are no brainers over a lifetime.