All Forum Posts by: AP Horvath

@Bill F.,

Of course cap rates are a measure of risk - but cap rates are also a measure of price. If we go into recession, any already distressed property owners will be on shakier ground, and as the pool of buyers dries up --- prices should go down ie cap rates go up. 

What am I missing? 

Will we see cap rates increase materially over next few months? Could a property that is a 5 cap become an 8 cap? 

@Scot Howat -- so how do people bridge that conundrum? Minimize tax exposure AND qualify for loans? 

Thanks @Curt Smith -- very helpful. 

So I guess the route is:

1) Try to qualify for loan with standard DTI/W2 underwriting.
2) See how much they will qualify you for and at what interest/points. 
3) Get a competing quote from a DSCR lender.
4) Compare subsequent deal cashflows, and choose better option. 

Question for you smart bears out there -- 

How do folks

a) reduce their tax exposure

while simultaneously

b) continue to qualify for financing for bigger and better deals (as they continue to do deals)? 

For example, my day job is in tech and I pay myself a modest salary and my company (I own it) pays for things like my cars etc etc

I get the basic precepts of a) (expense & depreciate everything allowed etc etc) -- but if you are too successful in that, when it comes time to finance your next deal, doesn't the lender beat you up about not having enough income and subsequently make it harder to qualify for debt for larger deals? 

Would love foranyone who has conquered what seems to be a fundamental paradox to provide their thoughts. 



 

@Michael Ealy -- any specific books you recommend on apartment syndication? 

@Michael Ealy -- Thanks. I will read these thoroughly. 

@Account Closed

Do you mean delinquent medical bills or credit card debt?  

@Derek Harris

So, let's say you had $300k -- what sort of deal would you look to put together? Lowest acceptable cap rate? How many doors could you get? Would you do it in Austin? Cap rates in Austin are slammed (albeit long-term growth prospects look great). 

@Jed Haslam-Walker

Thanks. Helpful.

@Gabriel Kolendrekaj

Yeah, flipping seems fairly high risk and a lot of work -- also, I hate doing rehab/renovation work. What I don't get about the BRRRR stuff is the refinance part -- yeah, you can take your money out, but then you have zero equity in a bunch of property with rent paying debt service. Is that really better than more equity in fewer eggs? I suppose it depends on your time horizon, right?

@Steve Vaughan

Yes, you're right -- I am not gonna abandon my current "trade" -- but it is high risk, and want to diversify my net worth. 

@Enrique Huerta

Thanks. Yes, makes sense. 

@Scott Brown

You mean hard-money lending? Seems lucrative -- what's hidden risk? Also, how well does one have to be able to assess risk on deal? For example, I couldn't tell you how much a remodel would cost and how long it should take? Would love to learn more nonetheless. Where can I find the 26 questions? 

@Annie Irizari

Thanks -- seems to be in line with what Scott recommends too.