Should you hold your chips or DoubleDown ?

Question

Good Morning BP Family,

I wanted to pick the brain of my seasoned investors. I recently completed a refinance that I am grateful for because of the hurdles and it took longer time then expected. Now I am a little torn because I want to reinvest the funds for a multi-family, but my DTI ratio is high and I am working on cutting that down.

Should I hold onto the funds and get the DTI down prior to the next step or should I look into multi-family right now ?

Todd Dexheimer · Answer

How well do your properties cash flow and what are your cash reserves? If they cash flow nicely and you have 6+ months of reserves, then keep buying. If not, then I would consider holding tight and work on those things.

It’s great to keep buying, but a recession will happen eventually and if you lose everything you worked so hard to build because you spread yourself thin, what’s the point?

Christopher Hunter · Answer

@Kervin Simon  Hello Kervin.  No sir.  You have the momentum and now is the time to scale.  Can you bring in family and friends?  Do you have a GP or LP?  Leverage your circle and use OPM and credit. Happy hunting

Danny Randazzo · Answer

@Kervin Simon start looking right now! Also, speak to a few commercial lenders at local community banks or credit unions in your area because they can do a commercial loan which allows you to qualify based on the property income compared to your personal DTI. They may look at your personal global underwriting (including everything you own, assets and liabilities) but they don't have to check every box like a traditional lender would.

Kervin Simon · Answer

Thank you @Greg Scully  you right ! I knew there were options out there to invest passively but was unsure in what in particular I’ll keep that in mind.

Wow @Todd Dexheimer that is true and that’s what I needed to hear, because I’m still having issues with one of the rentals and did repairs on another. I know I would feel more comfortable making sure all rentals are producing along with having reserves before starting something new thank you.

@Matt P. Your right on money with that  and thank you because I needed to hear it . I don’t like going forward when I know that’s lingering and I’m paying interest on it.

Matt P. · Answer

@Kervin Simon Depends on why your DTI is high. If you have a bunch of bad CC debt or something it's probably best to pay it before going in on another place. If you just dont make much money then the rental income from the new place will actually improve your DTI as long as your cash flow positive. Good luck.

Greg Scully · Answer

@Kervin Simon - You can also invest passively and still get good returns and tax benefits.  There are shorter term crowdfunding options, hard money loans.  You can stay fairly liquid until the right opportunity presents itself.  Just stay active, you won't find what you're not looking for.

Kervin Simon · Answer

Thank you @Christopher Hunter Where there's a will, there's a way !

Thank you as well @Spencer Gray your absolutey right.

Spencer Gray · Answer

If you continue to invest you run the risk of loss. That being said larger multi family deals operated professionally have one of the best risk adjust returns of any asset class.

If you put your money in a bank you absolutely will loose purchasing power via devaluation of the dollar.

Should you hold your chips or DoubleDown ?

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