Beaumont, TX · Member since 2017 · 23 posts · 9 votes
Hi, I want to see if i'm going in the right direction. I have 3 SFR right now and so far has been going pretty well. They avg. $500 ea. in profit after loan pmt , taxes & Insurance and a small amount for maintenance fund are taken out. I'm buying my 4th SFR this month. What i'm looking at doing is refinancing 3 of the 4 into one pkg loan for 15yrs. Taking out the equity ( Not ALL, But a good amount) to put towards other properties and some rehab on the existing ones. Am i on the right track? Isn't that basically the same as just refinancing one at a time? it looks like it makes sense.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Jay B., a better long-term approach may be to sell the properties and roll the proceeds into a small multi-family, 10-15 units. This way you can start taking advantage of economies of scale. How much equity do you think you have all together?
My spidy sense started to tingle at "$500 each in profit," that's a lot and makes me think that either you're not properly accounting for all of your expenses or you have so much equity that your ROI is terrible. Either way, run your numbers again and verify that you're actually putting your money to work in the best way.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Jay B., a better long-term approach may be to sell the properties and roll the proceeds into a small multi-family, 10-15 units. This way you can start taking advantage of economies of scale. How much equity do you think you have all together?
My spidy sense started to tingle at "$500 each in profit," that's a lot and makes me think that either you're not properly accounting for all of your expenses or you have so much equity that your ROI is terrible. Either way, run your numbers again and verify that you're actually putting your money to work in the best way.
Investor · Clearfield, PA · Member since 2016 · 31 posts · 13 votes
7y
@Brian Garrett so would his ROI be terrible because youre making the assumption that he's placed a large down payment on the properties or simply because he has built up equity from the properties that he's not leveraging at present?
Beaumont, TX · Member since 2017 · 23 posts · 9 votes
7y
Ok, I’ve double checked my numbers again and after my loan payments, taxes, Ins and maintenance. I’m clearing right at $500 a month on each. Based on what I paid for each property w/a 15% Down PMT and my current appraisals. My equity is about 30K+ in each conservatively. I haven’t leveraged anything as of yet.
Hollidaysburg, PA · Member since 2015 · 327 posts · 350 votes
7y
@Jay B., As a suggestion, there are some expenses you may want to consider, outside of PITI and little maintenance/fixes you're pulling out (i.e. vacancy and capital expenditures). On another note, the interest rates are going nowhere but up, and I completely agree with Jaysen Medhurst. You may want to look into mult-family. Good luck!!!
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Jay B., for the purposes of analyzing a property I figure the following: 7.5% Maintenance 7.5% CapEx 10% Vacancy 10% Management + actuals for PITI
That's why I think your cash flow looks high to me. Sure you may not have CapEx or Vacancy expenses for 3 years, but when they hit, you'll wipe out months of cashflow, if you haven't planned for them. For S&Gs run your numbers with those assumptions and see where they end up.
@Brian Garrett is right, @Anthony Caiola. The more equity you have in a property the worse your ROI. It affects cashflow, of course, but it's even more apparent with appreciation and your Return on Equity (ROE). If you own a $100k property outright and see 3% appreciation, your ROE is...3%. But if you have $20k of equity, then your ROE is 15%.