All Forum Posts by: Anna Catron

Just wrapped up a build-to-rent project on Wilson Road, and I’m excited to share how it turned out! We built two homes side by side on infill lots with a lot value of $20k each and hard construction costs of $196k (builder’s fee not included). Both homes are now rented on two-year leases at $2,175/month. We sold one for $257k in cash and are holding the other one as a rental.

I’m curious about others’ thoughts on build-to-rent (BTR) projects, especially on infill lots. Personally, I find BTRs to be more predictable with fewer ongoing maintenance issues, and they tend to attract high-quality tenants. On the flip side, the margins aren’t quite as high as with rehab projects. Has anyone else had similar experiences with BTRs? Would love to hear any insights!

My wife and I are considering a move from the Seattle area to the Scottsdale area to be closer to her parents. We own our house in Seattle and are trying to determine the best strategy for our move - what approach would net us the most money over the next 1-3 years. We're open to all strategies, buying, selling, renting, etc. We don't have much capital to work with outside the equity in our current home, but should be able to come up with first/last/deposit on a rental without selling.  

Here are the specifics on our Seattle house: 5br 4ba 3,400 sq ft, built in 2019, $1.7M est sale price, $5.5K-$6K/mo est rental value, 4.0% mortgage with $3.3K monthly payment, around $1M in equity. 

The market in Scottsdale is cheaper than the Seattle market to buy, however, the rental market is a bit higher, so we would likely be renting for around $6k-$7k/mo. 

Any and all advice is appreciated!

@Anna Catron conventional financing has a 12 month seasoning waiting period to do a cash out refinance based on after construction value. Anything prior to that will be based on total acquisition cost which is land value plus construction cost. You need a portfolio loan to do a cash out based on construction value. Happy to share some contacts with you if you need them. Feel free to reach out. 

Congrats on the newly built duplex. @Ash Hegde might be able to help out with this one. I don't think it should be too difficult to get a 15 year mortgage on it.  Why not 30 though?

@Anna Catron

you could try a DSCR loan broker. I've worked with The One Brokerage, David Greene's company, successfully in the past. not affiliated in any way.

Have you seen the Property Llama tool by Bigger pockets member Chris Lopez? 

https://propertyllama.com/

In my opinion, multifamily NOI growth will slow over time as inflation pressures in the U.S. continue to weigh on tenants' disposable incomes (which detracts from their ability to pay higher rents). The U.S. government is in a situation with an unsustainable debt load, and the only way for them to get out is to debase the dollar, which will cause further inflation.

I also think that demand for U.S. treasury bonds (which underpin most fixed rate permanent debt products) will dramatically decline over the next 20 years, which will cause interest rates writ large to substantially increase across the board. Reason being? Fixed income U.S. treasury bonds are not  attractive at all if you're being paid back with dramatically debased dollars with lower purchasing power. 

IMO, this combination of lower NOI growth and increasing interest rates will not only cause cap rates to expand / values to decline... it will also make it more difficult for owners to refinance, even out of "safe" long term fixed rate permanent debt.

Personally I would not want to own leveraged multifamily assets now for this reason.