September  6, 2022

September 6, 2022

President | Loan Officer
Mike Meena
Published on September 6, 2022

September 6, 2022

We are coming off of a lovely long weekend, and it gave me some time to think, and when I have that time, it just takes me to a dark place where I think about work or money! I thought I would share some of my thoughts.

Verify my mortgage eligibility (Oct 3rd, 2022)

I am always looking for a great deal regarding properties, and I wonder why people are not buying investment properties at this time. Yes, rates are higher than last year, but so are rents and Real Estate is still the number one way to fight inflation. Does it even make sense to buy an investment property at this time? Let’s do some math and see!

Buy an investment property for $700,000.00 and put 25% down with a rate of 5.875% on a 30-year mortgage.

Principal and interest = $3,105.57 + Property Taxes $729.00 + insurance $100.00 = $3,934.74

Verify my mortgage eligibility (Oct 3rd, 2022)

I can rent this property for $3,500 – $3,700 per month, so we will use $3,600.00 for now, and I lose $334.74 per month plus management fees of $180 + $150 for repairs = $664.74 loss! OUCH, but wait, there’s more!

I pay off $6,600 the first year = $549.00 per month, and in most cases, I can depreciate the property by $16,360 per year or write off $1363.00 per month. If you are in the 35% tax bracket (most people buying investment properties are there or higher), you would get back $477.00 monthly on your taxes.

So $549.00 + 477.00 = $1,026.00 to the good and $665.00 to the bad. $361.00 x 12 = $4,332 positive annual income.

Verify my mortgage eligibility (Oct 3rd, 2022)

If you put down $175K + Closing costs + repairs… = $200K +/- and I made$4,332.00 or 2.166% the first year! But wait, there’s even more!

If the property value increases by a mere 3% annually, you will pick up another $21,000.00 in profit, or $1,750 per month long term. We are at $25,332 in profit the first year, or a 12.66% return on investment!

I did not show your annual rent increases, but I believe they will surely be there for the next few years, which will increase your return even more! It is not a slam dunk like it was a year ago, but I think it still makes a lot of sense.

Verify my mortgage eligibility (Oct 3rd, 2022)

Rates got better on Thursday and Friday, and they got hammered this AM! Rates are now approaching the worst levels of the year! YAY! Rates will be bouncy this year, and I think rates will continue to be rough for the next 18 months or so.

  • 30-year Government Loans (FHA / VA) are in the low 5’s.
  • Conventional Loans up to $647,200.00 - low to mid 5’s.
  • High Balance Loans $647,201.00-$ 970,800.00 are in the mid 5’s to low 6’s
  • Jumbo loans above $970,801 are in the high low, to mid 5’s
  • 5/1, 7/1, 10/1 Arms are in the low 4’s to low 5’s for over $647,201. Under that, don’t bother right now!
  • Bank statement loans - They are available with 10% down again! 6’s + depending on down and credit score.
  • Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the high 6’s.
  • 0 down loans are in the 5’s – 620 credit score min right now! Mid 6’s, for the most part, up to $670,000.00.
  • 0 down Jumbo to $975,000.00 – 680 credit score – call for a quote
  • 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 - are typically 6.99% with limited fees – But they get you where you need to go!

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

I will be around all week if you have any questions or if someone interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!

Show me today's rates (Oct 3rd, 2022)
President | Loan Officer
Mike Meena President | Loan Officer
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(661) 714-6258

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