All Forum Posts by: Brittany Minocchi

You'll have higher out of pocket costs for inspections and appraisal on 5+ units, LTV typically doesn't go as high, many lenders require a 70%+ occupancy rate. Rates tend to be higher as well. If you're buying in Dayton, cost of entry is pretty reasonable based on borrowers I've worked with that bought there. If you only move forward with the 2-unit, you should be able to scale relatively quickly. Not sure what sort of financing you're considering (if any), but if I assume 25% down, that's $30k vs $87,500. You can almost get 6 units for the same out of pocket investment buying separately as you can buying the 6 unit, potentially slightly less cash flow with a better rate and less stipulations.

Quote from @Dwight Gunn:

I just got a pre approval today for a 125K DSCR loan 30yr fix no ballon. rate is 9.25 excellent credit 25% down with some room to buy down the rate. hope this helps. I was a little taken by how high it was but the broker explained that it is always going to hover higher that the traditional which is around 7.5 FHA is around mid 6 right now

I'm sure your lender has more information than me, but that seems high. If you are buying in a state that requires the prepayment penalty to be bought out, credit maybe isn't the greatest, it's a multifamily, etc that's going to affect your rate. The rates you mentioned for conventional/FHA are also high...feel free to reach out if I can be of assistance.

Best case scenario right now, I'm seeing mid 7s. Worst case scenario, maybe mid to high 9s. If you have good credit (700+) and you're looking at a long term, single family rental, my guess is you'd fall in that 7.5-8% range. Multi-families will be a bit higher. One of my lenders just priced a similar one here in OH (loan amount was $123,750) with a 720 FICO, 75% LTV SFH long term with a 1.00+ ratio and 3 year prepay at 7.49%. No points. Happy to chat if you'd like to reach out!

Yes, if you have enough equity in the property. 

Yes, you can open a HELOC. That's assuming you can find a lender willing to do it, not all will do HELOCs on investments. Many of them cap at a much lower LTV compared to a primary so it would depend on how much equity you have in the property at the time.

I much prefer MFHs over SFHs, although we buy small multifamily not in the commercial space. I'm sure it depends on the market as others have mentioned, but I haven't heard anything like that. $50k could go far here in OH depending on what class of neighborhood you're considering, whether you want something turn-key or are okay with rehab, etc. 

Quote from @Jeffrey Richard:

Quote from @Brittany Minocchi:

Depends on what your goals are! I wouldn't keep the equity tied up if you own them free and clear. If you don't want those particular properties for whatever reason, sell them. If you don't mind hanging onto them, cash out refi. You can do a 1031 exchange and use those funds towards another investment purchase (basically a tax deferment). I wouldn't tell someone to wait for rates to drop, because everyone else is waiting for the same thing....which will drive prices up. You can refinance out of a high rate. For what it's worth, Cleveland and other parts of OH are hot right now. I don't have a problem with Section 8 but I prefer multifamily over SFHs, so if it were me, I'd probably pull the cash out and use it towards MFHs to scale. Happy to discuss if you have any questions, feel free to reach out! 

 You're not concerned it's just not a great time to buy right now? I currently own MFH in the partnership in Ohio and they are a nightmare, high turnover, high complaints, constant problems.  The cash flow looks amazing on paper but in reality it doesn't come close.  You don't have this issue? 

I am looking for more potential section 8 properties; but just concerned about it not being a great time to buy. 

We definitely had some growing pains at first, but once we got decent tenants in place, we now have very few issues. I self-manage, so that probably helps too. I will say the Section 8 tenants were more of a headache that non-section 8, but that was the tradeoff for getting a check the same day every month. We don’t have any Section 8 units right now. We have arrangements with all but 1 tenant where they pay weekly or bi-weekly. We aren’t the type to throw up a notice when they’re a day late on rent, we just ask that they keep us in the loop with what’s going on. So far that’s been successful, and I think it helps limit the number of calls we get. If we DO get a call, it’s for something random (like 2 weeks ago, a tenant called because part of the fence blew down when we had some high winds). Haven’t had a call that was a complaint in over a year since we evicted a problem tenant, and her complaint was that we wouldn’t deliver her a case of water because she doesn’t drive. 

The saying is that the best time to buy is today. If you’re waiting for rates to drop, so is everyone else. If/when that happens people are going to end up in bidding wars and overpaying, with demand driving property values even higher. You just have to look at the deal as a whole and see if the numbers make sense. If they do, that’s what you need. If not, move on to the next. 

Depends on what your goals are! I wouldn't keep the equity tied up if you own them free and clear. If you don't want those particular properties for whatever reason, sell them. If you don't mind hanging onto them, cash out refi. You can do a 1031 exchange and use those funds towards another investment purchase (basically a tax deferment). I wouldn't tell someone to wait for rates to drop, because everyone else is waiting for the same thing....which will drive prices up. You can refinance out of a high rate. For what it's worth, Cleveland and other parts of OH are hot right now. I don't have a problem with Section 8 but I prefer multifamily over SFHs, so if it were me, I'd probably pull the cash out and use it towards MFHs to scale. Happy to discuss if you have any questions, feel free to reach out! 

Anything will a value less than $50k is going to be tough. You could potentially put 4 of the 5 into a portfolio, but the one you are estimating to be worth $39k would be left out. This is also assuming your figures are accurate on the others. Happy to talk more, feel free to reach out! 

Agreeing with the others saying not to put such a large down payment if you plan to use the funds for something else. You'll have to wait 12 months to pull your cash back out with a refi based on the new appraised value. You might be able to do a HELOC, but rate will be higher than a refi in most cases. It doesn't make sense to put $100k down.