All Forum Posts by: Brandon E

I appreciate both analysis of this deal;
Jon-
I was a little hesitant on the rental numbers, because I calculated using:
43K, 30yr @ 7% = $286 payment, leaving cash flow <$100... Should I be using the 6% interest factor?

Also, in going along with the idea to hold, if I paid for the 15k rehab out of pocket, would a bank approve a loan for just the $28K purchase price alone?

p.s. I think we should rename the 50% rule to call it the "Holdman Rule" haha, let's take a vote BP... - Brandon

P.s.-
Jon, the thought of a "new toy" had crossed my mind.... the auto industry needs us, haha =)

Everyone has brought up very good points and insight into using refinancing as a part of a strategy, thank you.

I left out two important details:
1.) I am talking about doing a cash out refinance when the value of the property has increased(about $15,000), and 2.) I have spoken to a lender who claims he is willing to do so at 80%LTV;
So in this case regardless of the lower interest rate the monthly payments would definitely go up. (which is why I can't see buying a rental with the money if it costs me $300 more in monthly payments just to get a cash flow on the rental of $100/mo.)
In the words of MikeOH "$200 loss Ouch!" - Brandon

Corey-
#6 on Eric's list explained options if your end buyer wants to buy the house you have under contract; They are three different options depending on the situation/contract with your seller.

1.) If you sell the contract to the buyer you are done; Or 2.) if you have a different purchase price with your buyer then you can double close; Or 3.) if the contract is not assignable sell the LLC to end buyer. - Brandon

Lately I've been contemplating a cash out refi on my primary residence (because of the 5% rates); I was reading some old forum posts on refinancing and thought about this:

Why would someone cash out refinance in order to purchase a rental property?

It seems like the increase in PI payments and cost to refi would eliminate any potential cash flow on the rental! - Brandon

Joe-
I'm glad to read that the house has your approval, thanks for your thoughts; There's a strong chance that the repair cost will be on the lower end of my estimate and with any luck the seller will accept a lower cash offer. These conditions would make a good deal even better for sure!

Jon-
I'd be looking at monthly rent of only $750 in this location. - Brandon

Hello BP,

Up for consideration is the following:

A SFH priced at $28,000. It is 1200SqFt, 3 BR 1BA that an investor purchased a year ago for $17,000; He/she has done a good amount of work (drywall on one level, framed the basement).
ARV looks around $75-80K, with about $10-15K of repairs.

How does this deal sound, and would a lease option make a better exit strategy than a quick fix&flip right now given the market for SFH? Thanks very much - Brandon

When filling out a personal income statement, it asks for "net rental income"; should I just use the 50% rule and figure half the gross rent-PITI? What will give the most accurate financial picture?

It worked for me; I was able to successfully download & save Jon's simple analysis tool by exporting it to Excel. - Brandon

Originally posted by Rich Weese:

I don't see much margin in selling it if you have 40 plus 15 and only get 70 on the sale. You would have selling costs, holding costs etc. You might only make 10-15% when done. You might as well loan your money out on HMLs and make that with less work.
If you like the area, upside etc, AND can refi it to get your money out, then I'd look at it differently. Rich.

Very valid points Rich, thanks for your honest feedback; So how would you see it differently if it can be refi'd? Meaning you would hold & rent or flip at a mediocre profit margin?
Ultimately it goes back to Mike's take on this, that I need to buy at a lower price and rehab at a lower cost to even seriously consider moving forward.... - Brandon