2-6-24 – Investments Make Sense! Even Today!

I will start with Happy Birthday #86 to my Dad, my golfing buddy, my mentor who still works at Northrop Grumman even though he is “over the hill!” The guy who taught me about sports and always attends a UCLA Basketball and Football games! He has more energy than most of us and gets funnier every year!

Now to Business! I love to run these scenarios occasionally and want to remind you why everyone who can should buy investment properties.

Below are a couple of examples of why you should buy:

Antelope Valley –

$400,000.00 Price – 25% down payment – 30-year fixed rate – Principal and Interest payment = $1993.89 + Property Taxes $417.00 + Insurance $150.00 = $2560.89 + HOA

Interest rates are trending downward, and most buyers are looking to buy now before prices increase further. When rates do go down, you can expect the following savings when you refinance:

When rates drop by 1%, and you refinance, your monthly payment will drop by $197.

When rates drop by 2%, and you refinance, your monthly payment will drop by $385.

When rates drop by 3%, and you refinance, your monthly payment will drop by $563.

In the above scenario, you are paying off $3053 in the first year of ownership, which will increase annually. With 4% annual appreciation, the property will go up by $16,000.00 annually, and you can depreciate the property and write off all the expenses. If you rent the property for $2700, you will make about $100.00 monthly. You are paying off $254.00 monthly and adding back $1333 in appreciation. The total profit is $1588.00 monthly on a $115,000.00 ($100,0000 down + closing costs and repairs). You are still increasing your net worth by 13.81% annually, NOT INCLUDING DEPRECIATION, which could be an additional write-off.    

Santa Clarita Investment Property –

$750,000.00 Price – $187,500.00 down payment – 30-year fixed rate – Principal and Interest payment = $3738.55 + Property Taxes $781.00 + Insurance $250.00 = $4769.55 + HOA

Interest rates are trending downward, and most buyers are looking to buy now before prices increase further. When rates do go down, you can expect the following savings when you refinance:

When rates drop by 1%, and you refinance, your monthly payment will drop by $370.

When rates drop by 2%, and you refinance, your monthly payment will drop by $722.

When rates drop by 3%, and you refinance, your monthly payment will drop by $1056.

In the $750,000 scenario, you are paying off $5724.95 in the first year of ownership, which will increase annually. With 4% annual appreciation, the property will go up by $30,000.00 annually, and you can depreciate the property and write off all the expenses. If you rent the property for $3800, you must come out of pocket for about $1000.00. You are paying off $477.00 monthly and adding back $2500 in appreciation. So you are still increasing your net worth by 10.00% annually, NOT INCLUDING DEPRECIATION, which will be an additional write-off of $10,000.00 – $20,000.00 annually.  

I am throwing more ammunition at you today. Imagine buying something today and refinancing when rates drop 2%. Now, what are you seeing? An additional 3% annual Return on your investment. Oh, and when rents go up? More $$$ and more profit!!!

I would love the opportunity to sit down with your clients who are debating buying an investment property. I would love to help them, and in 10 years, they will kiss your feet and say thank you!

Do you know anyone with 2+ investment properties who is struggling? I don’t!

Condo / Townhome issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE:

1. Scenic Hills – Insurance
2. Bouquet Canyon Village – Insurance
3. Madison at Town Center: FHA financing is available with 3.5% down. Non-warrantable loans can be done with a minimum of 10% down until the litigation is turned over to the insurance company.
4. Cornerstone – Insurance
5. Canyon Oaks – Insurance
6. Brookside Walk – Insurance –
7. Shadow Ridge – Oak Park – Insurance
8. Sierra Glen Condos – Insurance
9. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!
10. Rainbow Sierra Terrace – Underinsured and voting on Insurance in March! NEW!!!

As of today, the list of condos that are having more severe issues:

1. Mariposa: No Loans until further notice. Yes, people are saying they can do them, and the HOA is pushing people to lenders, and we have all been using the same bank that says no more!
2. West Creek Condos and Townhomes: No Loans until further notice. Yes, people are saying they can do them, and the HOA is pushing people to lenders, and we have all been using the same bank that says no more!
3. American Beauty Village West: It looks like the issue is not Insurance, but they have a reserve issue now! We can do non-warrantable loans there with 20% down! YAY! It’s a start, and we hope things clear up and regular financing will be available in the future.
4. Bridgewater, Emeryville  - Insurance issues
5. Cabrini Villas, Burbank  - Maybe able to do 10% down, case by case! Please provide a specific address & LTV & occupancy.
6. Morada, San Diego  - Insurance issues.
7. Parkwoods, Oakland  - Insurance issues.
8. The Summit, San Diego  - Insurance issues
9. The Met at Warner Center, Woodland Hills  - Due to the project size, we can lend with 10% down on the project side that is on Burbank and Owensmouth. They are no longer lending for the project section on Canoga.

Please let me know if you hear anything new on condos or townhouses.

Interest rates were great Monday through Thursday last week, and then got hammered Friday and Monday! Today is a recovery day, and who knows what tomorrow will bring?

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA) are in the high 5’s and low 6’s
• Conventional Loans up to $765,550.00 are in the low to mid 6’s
• High Balance Loans $765,550.00-$ 1,148,325.00 are in the mid to high 6’s
• Jumbo loans above $1,148,325 are in 6’s
• Bank statement loans - They are available with 10% down again! 8’s and 9’s depending on down and credit score.
• No income qualifier – 40% down with reserves! In the 8’s!
• 0 down loans are in the high 7’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - typically 7.500% with limited fees – and they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until February 2024???
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! The above are LA County Loan Limits.

I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!