Results for ‘Debt’ category

The Magic Number for FHA Loans

12. That’s the magic number for FHA loans on 2-4 uni apartment buildings. It stands for 12x the annual rents. Why is 12x grm the magic number for FHA loans? 12x a building’s total annual rent (including the fair market value rent of the unit you will occupy) is basically the maximum price you can

Why do deposits need to be sourced?

Today’s question is quick: “Why do deposits need to be sourced?” I presume this question refers to the source of the downpayment for the purchase of a property. When you buy with a conventional loan (e.g. not an FHA loan), the bank lending you the money will very often want to know the source of

How to buy an apartment building when you don’t have income

Sometimes people come to me with the following problem: They have a bunch of cash, but they don’t have much (declared) income. They want to buy an apartment building but they don’t know how. It turns out that it’s much easier to help these people buy 5+ unit buildings than it is to help them

Your good credit is incredibly important

In real estate, unless you have so much cash it’s coming out of your ears, your credit is perhaps your most important asset. Late last year, I refinanced our 16 unit building on Reno St. When we bought the property in 2008, our interest rate was locked at 6.3% for three years. Because I hadn’t

Are LA apartment building prices entering a bubble?

Recently, prices for apartment buildings in Los Angeles have been increasing rapidly. 12 months ago, you could find buildings in improving neighborhoods for less than 10x annual gross rents. Now, the range is more like 10.5-11.5x for larger buildings and up to 14x for smaller buildings. Inventory in all asset sizes is also very slim

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