All Forum Posts by: Alex Forest

Originally posted by @Joe P.:

Originally posted by @Amelia McGee:

@Joe P. I think a portion of this depends on your end goal. Do you want to retire with a paid off property (refinance to 20 year and shave off 8.5 years of loan)? Or do you want to reduce your P+I, and in turn, increase your monthly cash flow (refinance to 30 year)? 

If it was me, I would refinance on a 30 year amortization and reinvest the money I'm saving in P+I. By paying the mortgage off sooner, your ROI is only as much as the interest that you saved. I think you'd be able to get a better ROI by buying more properties.

Definitely don't stand pat right now with interest rates as low as they are! 

That's where I'm at - it's almost silly to not and shave off almost HALF of the rate. Really my goal is cash flow - I want to scale as much as possible, and having more cash flow improves that position. A paid off property is wonderful, but chances are I'm going to continue to use Fannie/Freddie until they tell me I can't anymore, and then I'll start to look at paying down the mortgages more closely. The 20 year is very advantageous for two reasons -- I only increase my monthly payment a bit, but I shave off multiple years of payments AND typically the equity I'll build on that will be faster. If my property appreciates a bit, I could look to lend off that equity and again, increase my scale.

Thanks for your input, you might have talked me into it. :) 

Hi Joe, the rates are impressive now aren't they?  I'm in the middle of something very similar.  Dec 2018 duplex purchase at 5.5% with a $90k loan, and doing a refi cash out at 75% ltv at 3.65% 30 yr.  I wanted to suggest, since you mentioned a goal of yours was to scale, have you checked recent sales/comps in the area?  You might be surprised as they've gone up quite a bit in a number of areas and if you purchased at a good price, you might find the appraisal comes in high enabling you to pull out considerable cash for your next investment (much quicker than relying on monthly cash flow).  I'm pulling out $50k (the orginial downpayment plus repairs and then some) and the monthly payment is only increasing something like a little over $130/mo, still leaving cash flow on the property.

Just wanted to mention it might be worth taking a look at recent sales if you havent already...I think now is a great time for cash out refi, with the super low rates and low inventory that pushed up prices, whether to bolster cash reserves, or to get ready for the next, while also locking in the better terms.

Originally posted by @Arthur Schwartz:

My understanding is that it is a Fannie or Freddie rule not to finance when more than one house is on the lot.  See the attached link and scroll down to "Multiple parcels" where it says each parcel may contain only one dwelling unit.  Subdividing the lot allows the buyer to sell each home separately which may be advantageous basically "buy two at wholesale, sell each at retail"

W hat link are you referring to, I didnt see one attached or referenced in your post. Thanks!

Also, if the property is considered a single unit with the second structure an accessory unit, that would mitigate if this were a concern.

Originally posted by @Jack B.:

I am cash out refinancing 4 rentals to buy 4 more rental houses. I have cash on hand to do it, but figured I'd reduce my taxable income and avoid putting fresh money that is not subject to RE capital gains taxes into new deals.

At first I was not going to buy new ones in WA because of the seemingly never ending eviction moratorium. But then I did some digging and found many other states have extended theirs as well and then the CDC came out with a national ban.

I figure I can mitigate this by being EXTRA picky about income, credit and career field, making sure it's a multi income household, and also that it would be worth it to take on the rentals if I reduce the risk like this. I'm pulling out nearly 500K out of rentals, much of which is coming from 2 rentals I bought just 3 years ago.

I figure the rising prices and long term rent increases will be worth it, and I'm also considering a new strategy, rather than relocating my rentals, I'd leave them here to get the insane appreciation and cash-out refinance periodically to buy rentals paid in cash in a different lower cost of living state I plan on relocating to. This way I will have my 10 loans maximized and appreciating for me here, and any number of paid off rentals for insane cash flow where I want to move to. Boom!

Thoughts?

Sounds like a pretty reasonable strategy! I think cash out refi is an ideal strategy in and of itself right now if it's been a little while. If the reserves are there to weather afterwards, then deploying for new rentals if come across a good deal can make sense. I do wonder some about timing...if you dont come across a valid strong deal, why not wait till spring or summer sitting on strong reserves. Ensures strongposition, allows more possible deals to surface, and that isn't too much time to pass. Sounds like you got some substantial appreciation over the past few years. Hopefully that trend holds. 

Originally posted by @Jack B.:

Originally posted by @Allan Smith:

I'm still buying rentals aggressively. Can always do month to month leases and give 30 days notice. You can still evict for noncovid reasons, such as if they don’t move out after 30 days.

Under the CDC moratorium you can? Link? The CDC policy doesn't mention anything about 30 days, just non rent related reasons.https://www.federalregister.go...

WA's policy is that you can evict if you move in or sell, with 60 days notice. But the CDC moratorium....

I'd be interested in Allan's response too. What would be the basis? Unlawful detainer?  Particularly, and ironically, if they stopped paying, what would be the justification?

@Steven Sestir So you havent purchased it yet?  You mentioned its leaking. Ask your realtor to include a credit towards closing costs for $1000 to cover it. That will need to be replaced and this is the easiest and most friction less way to get it covered.  But then, after the sale, actually do it too.

Originally posted by @Dan Gamache:

@David Kerner I would stay away from the loan you need to refi every 5 years. As we've seen with covid, anything can happen. What happens if property values take a big hit or interest rates are hiked. Biggest concern would be if loan is due and you can't refinance for some reason (property value, loss of income, etc) you risk losing property to foreclosure. I know alot of investors who got loans pre-covid and wouldn't be able to refi now due to guideline changes.

This is a good thread. This comment regarding the potential inability to refi, for whatever reason, in 5 years is the biggest risk I see (as an observer).  A resetting can be handled, but the potential to have to re qualify everything sounds like a real risk. Nevermind the restart of the clock on paying down meaningful principal, which is also a major downside.  Try to lock in low rates today for the long haul. Who knows what rates or terms will be in 5 years?

Also, as mentioned above and I've heard elsewhere too, if in a portfolio loan , all those properties still count towards 10, then does the reason to wrap these into a portfolio dissapear? I dont know the answer definitively but seems important to know.

And if yes to above, then why not keep the existing conventionals and refi a couple with the greatest equity to pull cash....maintaining the fixed rates for a very longtime, then use a portfolio or commercial loan for future purchases?

@RaeLena Morrison I dont think the use as an owner occupied would affect the ease or difficulty of getting the sale to go through. Would of course affect other things like better loan terms, potential conformity with zoning, etc.  Is it in conformance with zoning?  If so, that clears that hurdle.

You mentioned there were quite a few in the area with this setup? Then, better chance there are recent sales that are similar and comps, which will make the appraisal easier.

My non professional suggestion is if you like a property, make an offer, but make sure there is a clear contingency of obtaining financing with terms ie conventional with rate up to x and y points, etc in the purchase contract offer that you are comfortable with.  And consider a longer date to close, maybe 45 days. Ifaccepted, get the appraisal ordered as soon as feasible. And you may consider helping yourself by helping the appraiser.  Ask your realtor what they would use for comps, find similar 2 houses close by sold recently  yourself, print them off and meet the appraiser on site.

Originally posted by @Ruth C.:

Originally posted by @AJ Shepard:

Originally posted by @Ruth C.:

Originally posted by @Dave G.:

@Ruth C. thank you for applying some critical thought to this. I am not website pro, but at a minimum, why would one not just contact their politicians directly? They all have many vehicles available for their constituents to contact them. They all want to be contacted. I don't see a need for this website, at least a need that benefits a property owner. Agree there is no guarantee of what they are doing with the information they receive. It could even be gathering information about investors/property owners that will be used adversely against those very investors/owners. I will be continue to be vocal via direct means and through my local REIA.

@Dave G.: Exactly. It looks a typical Big Tech unicorn/commercial enterprise harvesting information from visitors that could be sold to parties interested in exploiting this entire situation. There's nothing anywhere on the site that suggests that it's affiliated with any official government agency, and Wikipedia lists Fiscal Note (the company running Voter Voice) as a "a privately held software, data, and media company."
 

The website that I listed is a service that NARPM (National Association of Residential Property Managers) pays for and uses to lobby on behalf of Property Managers and in this case Landlords as well.  The intent is to make it incredibly simple for you to contact your representatives about the specific issue.  I have participated in several Calls to Action to send these emails out and in each case, I receive communication back from my Representative, one that they received it, and a second later on addressing it.  The intent is to relay to the representatives that we are paying attention to what they are doing, or in this case, not doing. 

Here is the link in case you missed it:
https://www.votervoice.net/NARPM/campaigns/77031/respond

All this tells me is that a lobby decided to let a third party commercial entity handle its correspondence between it and government officials, when they already have a direct link to those officials themselves on the officials' own websites. So, to say that NARPM uses it means as much to me as saying the NRA, MAD or NAACP uses it. 

I repeat, Fiscal Note, which runs VoterVoice.net. is a unicorn aka tech startup by three guys who are no more than 30. Like most GenZ/millennial-run unicorns, it's trying to monetize political expression and activism by pretending to offer a service, in the same way Facebook and Twitter monetized "free speech". Reviews of FN at places like Glassdoor show that it's trying to acquire other companies and an IPO; does this sound like a company that has a vested interest in giving people a "voice"? No.

We have enough trouble with people throwing their free speech away on Big Tech platforms; we don't another one acting as a middle man to talk directly to our representatives. Keep in mind that I'm not against the spirit of your post but that, IMO, it's better for people to contact their reps than to go through Big Tech GenZ/millennial unicorn.

I was thankful for the link and platform. I would like to say that I would take the time to write my Representative and Senator directly using their mailing address or email from their respective websites.  But, the fact of the matter for me is it likely wouldn't happen, and I imagine that is the case for many others as well. I did contact them through this site, it's easy.  Its important that Representatives hear from Independent Landlords on this issue, as well as National Associations (which will be further supported if constituents reach out themselves). I'm thankful the Associations are reaching out at the national level, and hopeful to see all these Independent Landlords and constituents doing the same on the ground level.  btw, if you go to the National Real Estate Investor Association site, home page has a link to contact representatives, senators on this same issue. They use voter voice as well.  If anyone is uncomfortable with the platform, then simply contact directly.  Just please don't be silent on the issue.  They need to hear from Landlords.

This article will resonate with the group.  Starting to hear some voices from Associations representing Independent Landlords at the national level:

"The sweeping order effectively requires landlords to subsidize distressed tenants’ housing through the end of the year or face criminal penalties and hefty fines. That’s a tall order for the country’s 8 million independent landlords — most of whom lease a unit here or there on property they own without the financial backing of professional management companies....

Bob Pinnegar, CEO of the National Apartment Association. “Most of the rental housing we have in this country is provided by individuals who are simply running a small business and trying to stay afloat and survive.”...

"As a result, lobbying groups for the building owners are pressing for Congress to pass some form of direct assistance to keep tenants paying their rent. Landlords are also challenging Trump's action in court.

https://www.politico.com/state...

I'm curious if anyone has a source they like (data, charts) on how cap rates have changed over time (small multi apartment units) and how today's compare to years passed for a sense of perspective.  Also, whats the best way to get a sense of what is a reasonable cap rate (expensive or attractive) for a local area, other than looking at a lot of listings to get a sense (related to above though since this would only be a snapshot in time and these can change over time).

I would think with interest rates being so low, it would make sense for cap rates to have compressed over time up to present, since it would take less to service debt.

I'm curious if Carlos and Mary M. worry less about the cap rate (as a measure of affordability or expensiveness) and instead focus on how to affect NOI through value add...could have exact same cap rate at purchase as one does after renovations/increased rents to increase value (at sale of refi time)...so do you just generally work with the market cap rate and focus on affecting NOI?