All Forum Posts by: Annchen Knodt

Thanks @Jonathan Greene, that makes a lot of sense!

@Jonathan Greene, would you be able to elaborate on why you redirected texts because you "found them too invasive"?  I hear so many people these days saying that texting is really the way to go, but I've had the thought that it would be too much of a turn off for most people to make it worth doing.  Would love to hear your take! 

Hi @Chuck Hollowell, with delayed financing you should be able to get either 75% ARV or the "total cost of your initial investment", whichever is lower.  Lots of people have had success with putting funds for rehab in escrow so that they appear on the closing statement and can count toward that "total cost of your initial investment" (which also includes closing costs etc, btw).  

It sounds like you are already making a plan with your mortgage broker, which is great since using the DF exception can be tricky and so you want to have the details laid out up front.  You could also ask them about including some rehab funds at closing if you want to be able to finance those as well, but otherwise it sounds like you have a solid plan barring any craziness arising from the current economic situation!

Hi @Jim Cousino and @Greg Scott, I'm also thinking about optimizing my financing strategy for the current environment, and wanted to ask a clarifying question here: when you say "put the $90k into your HELOC to pay it down", do you mean that you have already taken a draw from the HELOC and want to pay it back? That doesn't make too much sense to me so I think I must be missing something… new to HELOC's so wanted to ask!

Congrats, Patti!  Sounds like a great first investment experience.

Hi @Richi Brown!  Congrats on getting started in investing :-)  There are certainly lots of folks out there who have done well with student rentals.. if you haven't already, be sure to check out episode 220 of the BP podcast for a good discussion on the topic.

I think you can do really well if you have a good understanding of the demand for student rentals for the given university, and especially if you have some confidence that your property would be appealing to other members of the community as well, in case you have any issues with renting to students.  Renting by the room can be logistically difficult, but the potential for higher returns makes it really worth considering and putting in the time to come up with great systems for handling it.

Welcome to BP, @Jim Langley!  Hopefully everyone here can help you move toward your goals.

From what I've heard, rates are really bouncing up and down right now.  Here is one place to read more about it: https://www.realtor.com/news/trends/mortgage-rate-madness-theyre-up-theyre-down-where-will-they-land/

5% isn't bad if it works with your numbers (still extremely low historically), but seems likely that they will stabilize at a somewhat lower mark pretty soon, so depending on your goals / situation you may want to wait. 

110% agree with @Jonathan Greene. There are already lots of programs out there designed to make finding deals "easy", and the problem with anything that is easy is that everyone is doing it.  I'm a programmer myself and have considered ways to use my skills to help with lead gen, but have realized that just about anything I can think of has already been done.  If you are just learning to code, it could be a great exercise but it probably wouldn't be the first way I would choose to spend my time.  Not to discourage you - maybe you could really get creative and come up with something new that would be awesome!  These are definitely different times and I bet we'll see folks operating in ways we hadn't thought of before.

But the sort of things that consistently work are systems like Jonathan describes, which I've come to understand are pretty much always going to include a large financial investment to really get the lead funnel to the size you need to result in successful conversions.

Good luck!

Hi @Brent T Galbreath, I think the references here to pulling money out later are referring to doing a cash-out refinance into a conventional loan, which with today's low interest rates provides a fantastic way to secure long-term debt at a very low cost. Lots of investors use cash-out refinances as part of the BRRR strategy to pull money out after rehabbing and increasing the ARV, but generally need to wait a 6 month seasoning period if the capital they used up front was borrowed somehow (hard money, private money). In your case, if you are using just your own cash, you can take advantage of the "delayed financing exception" to pull cash out and put a mortgage on the property right away. The Delayed Finance section of this blog post is one place to start to learn more about it.

This approach can be advantageous by allowing you to be more competitive with cash offers and quick closings when you purchase, but a disadvantage is that you have to pay some of the same closing costs again when you refinance (though if you are able to purchase for slightly less with a cash offer it might even out). It can also be a somewhat complicated process so I would recommend talking to your lender before getting started with this strategy.

But if you have the numbers right on your particular deal, it looks like a cash-out refinance could leave you with quite a bit less invested in the property than if you made a down payment on a conventional loan up front. The higher mortgage payment would lower your cash flow but you can run the numbers and see what you think.  

In the current environment, I think a consensus is to lock down as much long-term debt as you can, while making sure you have plenty of cash reserves, which sounds like is not an issue for you.  Also keep in mind that mortgage rates, while generally low, are bouncing around quite a bit right now with all the volatility.  This makes the delayed financing option particularly appealing to me - you can purchase the property and then wait for the rates to stabilize in a few months to put your loan on it (I've seen lots of projections that they are likely to bottom out in the summer and stay there for a while).  

Another thing to keep in mind in this environment is that you might also want to factor in higher numbers for vacancy, because depending on your tenant market it might be longer before you find someone to move in!

Good luck, sounds like you have a good first deal in the making!