All Forum Posts by: Alex Smith

@Alex Bekeza- I agree.I think they are better suited for our flip projects and not our rentals. And yes, we could do 75% LTV, but we would rather not. It's just not our strategy. We have done it on BRRRR's, but for these properties we are not looking to increase the loan about to 75%. It would decrease the cashflow and we don't necessarily need the cash to purchase new properties because we have flips going for those funds.

Thanks for the tips @Scott Mac

Hello everyone!

So recently I used LendingHome to fund a flip we are working on and my experience was phenomenal. I then got talking to them about rental loan products (failed to ask about fees associated with refinancing) and then started the process of refinancing 3 of our rental properties with them. I'm going to write out the details of the properties with their current notes below...

Property One:

Appraised Value: $130,000

Current Mortgage: $57,284

Current Interest Rate: 6.5% (Adjustable Rate-every 3 years)

Monthly Mortgage Payment: $425.04

Property Two:
Appraised Value: $135,000

Current Mortgage: $64,069
Current Interest Rate: 6.75% (Adjustable Rate-every 3 years)
Monthly Mortgage Payment: $461.53

Property Three:

Appraised Value: $160,000

Current Mortgage: $86,000
Current Interest Rate: 6.75%
Monthly Mortgage Payment: $527.20

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My thought was that I would refinance up to 60% LTV, get a better interest rate, have roughly the same monthly payment factoring in the lower interest rate and pull out some cash to put towards another deal.

Appraisals came back great and I calculated that I would be able to pull out about $40,000 all together between the 3 properties and still cashflow what we are currently cash flowing now. 

Now that I'm to the point in the refinance process where I need to confirm my final loan terms, I'm realizing that refinancing these properties is going to be expensive and I'm really not going to be able to pull cash out? So is it worth all this just to get the lower interest rate? I'm thinking it isn't. 

For example...

Property Two:

Appraised Value: $135,000

Current Mortgage: $64,069
Current Interest Rate: 6.75% (Adjustable Rate-every 3 years)
Monthly Mortgage Payment: $461.53

PROPERTY TWO (PROPOSED REFINANCE):

Loan Amount: $76,000

Intrest Rate: 5.13%

Monthly Mortgage Payment: $413.81

^Saving $47.72 a month, better interest rate and thought I'd get a little cash back after closing costs

Cash required at Closing:

Origination Fee: $2,000

Service Fee: $999

Pro-Rate Interest: $75.74

3rd Party Costs: TBD

Advance Payment of PITIA: $3,063.30

So after all is said and done, I really won't be getting any cash back....

Thoughts? What would you do? I feel bad backing out of all 3 now as everyones been working on it and it's my fault for not asking for these fees up front I just honestly did not think it would be this much or that they'd want 3 months PITIA in advance (Which is fine...I'd just cashflow more for 3 months) but I'm not feeling good about this....

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $80,000
Cash invested: $24,500

Purchased this with a Construction loan, which required 25% down on the purchase price and then we were able to take draws from an additional $40,000 for renovations. We put about $20,000 into each unit. Placed tenants in both units (Each paying $1,200 a month) and then the initial loan + rehab funds were rolled into a conventional loan of $100,000.

What made you interested in investing in this type of deal?

Long-term investment with sweat-equity potential. We love fixer-upper properties

How did you find this deal and how did you negotiate it?

MLS- Foreclosure

How did you finance this deal?

Construction Loan with 25% down on purchase price. Bank allotted $40,000 for rehab then rolled it into one conventional mortgage when project was finished.

How did you add value to the deal?

Updated both units, added central air, gutted and refinished bathrooms with nice finishes like tile, added more cabinets and changed layout in kitchen

What was the outcome?

Both units rented and tenants love it and plan to stay a long time. The duplex post-reno ended up appraising for $200,000 so we have 50% equity in it already.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes

Single-family residence buy & hold investment.

Purchase price: $25,000

Cash invested: $10,000

Contributors:
Dawn Curry

For Sale By Owner that was sitting for a while because tenants destroyed it. Renovated right at the start of Covid-19 with all cash, then pulled cash out right after renovations were complete and tenants were placed. Tenant was planning to purchase the home Summer 2021, but that fell through, and another buyer has been lined up at $115,000 for late Spring. Bought it, Rehabbed it, Rented It, Refinanced It, and soon to be Sold!

This place was GROSSSSS......but now it's SO cute! :)

What made you interested in investing in this type of deal?

Extremely Distressed and great potential for sweat equity

How did you find this deal and how did you negotiate it?

FSBO

How did you finance this deal?

Cash then cash out refinance

How did you add value to the deal?

fully renovated

What was the outcome?

Currently Rented with about $150/mo cashflow
Will be selling in May/June and anticipate about $50,000 profit before taxes

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Not thus far, but I obtained my real estate license last year and will be handling the sale as a Realtor.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $55,000
Cash invested: $15,000
Sale price: $140,000

Contributors:
Dawn Curry

Made settlement yesterday on our 6th unit! it’s a 3 bed, 2 bath single family home. We bought this one with a construction loan. We put 25% down on the purchase price (55,000) and were able to incorporate almost 20,000 in the loan that we will take out in draws for the renovation. When Reno is complete, it’ll be rolled over into a conventional loan totaling $61,000. Getting in and out of this one quickly because we already have a tenant lined up to move in November 15th :)

What was the outcome?

Fast forward a little over a year....some big ticket maintenance items popped up and the market picked up, so we gave the exterior a face lift and took care of any issues with the house. We were all in for around $96,000. January, 2021, the home sold for $140,000 and after closing costs and taxes we profited roughly $27,000.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $55,000
Cash invested: $15,000
Sale price: $140,000

Contributors:
Dawn Curry

Made settlement yesterday on our 6th unit! it’s a 3 bed, 2 bath single family home. We bought this one with a construction loan. We put 25% down on the purchase price (55,000) and were able to incorporate almost 20,000 in the loan that we will take out in draws for the renovation. When Reno is complete, it’ll be rolled over into a conventional loan totaling $61,000. Getting in and out of this one quickly because we already have a tenant lined up to move in November 15th :)

Fast forward a little over a year....some big ticket maintenance items popped up and the market picked up, so we gave the exterior a face lift and took care of any issues with the house. We were all in for around $96,000. January, 2021, the home sold for $140,000 and after closing costs and taxes we profited roughly $27,000.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $55,000
Cash invested: $15,000
Sale price: $140,000

Contributors:
Dawn Curry

Made settlement yesterday on our 6th unit! it’s a 3 bed, 2 bath single family home. We bought this one with a construction loan. We put 25% down on the purchase price (55,000) and were able to incorporate almost 20,000 in the loan that we will take out in draws for the renovation. When Reno is complete, it’ll be rolled over into a conventional loan totaling $61,000. Getting in and out of this one quickly because we already have a tenant lined up to move in November 15th :)

Fast forward a little over a year....some big ticket maintenance items popped up and the market picked up, so we gave the exterior a face lift and took care of any issues with the house. We were all in for around $96,000. January, 2021, the home sold for $140,000 and after closing costs and taxes we profited roughly $27,000.

Hello! 

I just wanted to see what other landlords would do as I’ve never come across this situation before. A recent wind storm ripped open a storm door and shattered the glass in it at one of my rentals. The door wasn’t latched. Is this something I should be paying for? The tenant is actually about to move Jan 1 so I was wondering if I could justify deducting a new door from the security deposit or if there are too many variables at play to do so.... 

Thanks in advance!

Hello!

Does anyone have any recommendations for a land surveyor that services the SJ area? 

Thanks in advance!!!