All Forum Posts by: Carlos Quiros

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I've worked with a couple of investors from Cali who have successfully done flips in Columbus, OH. They manage the project with a trustworthy GC.

What has been your biggest challenge? I have rentals in Ohio and have an opportunity here for another one but it needs work.

Quote from @Carlos Quiros:

Good afternoon-

Do any SoCal investors here have flips that they do out of state or has anyone done any?

How do you manage those if you have?

Not easy but can be done. I do them all the time in Cleveland from FL, 
Good luck 

Out of state flips are very risky. You must develop a trustworthy team and then visit the properties even if they are a distance away. If you can invest in a location where you have friends or family who can be your eyes and ears on the ground you are more likely to have a positive outcome. It is important that you control your funds and do not let he contractor get out ahead of you or you will be left with a overpriced unfinished rehab to salvage. 

There's no prepayment penalty but the equity has not built up quite large enough yet except maybe for one since I have been adding alot of value to it however the rates are about the same so it wouldn't make sense now for me to do that.

Quote from @Carlos Quiros:

New investor here

I have 2 rental properties (duplex & triplex) that I bought at the highest interest rates (8%), they DO cash flow but now that rates have softened a bit my question is when do you all as investors decide to pull the trigger on refinances? A full point? 2 points?

Just looking for constructive feedback....

Carlos

 Hey Carlos, 

This answer will depend on your long term goals and current situation. Are there any prepayment penalties on your loan? Do you have a lot of equity built up? Is your goal to maximize cash flow or to paydown your mortgage quicker?

It sounds like your goal is to maximize cashflow. If this is the case I would hold off until you see a monthly payment difference worth pulling the trigger on. You also have to factor In your closing costs each time you refinance, and if the goal is to pay down your loan aggressively, you will be hitting reset each time you refinance. 

Yeah this makes alot of sense. Running these numbers to see how long it's going to take to recoup that cash out is a good idea Brian. 

Thank you for the reply and providing your insight here.

Carlos

Aloha Carlos, 

This is a question that a lot of investors (in my opinion) get wrong. They look at the interest rates and say, rates dropped X% so now it's time to refi. This doesn't make sense because there are so may costs to refinancing a property that, when you do the math, depending on how much your property is actually worth, the monthly improvement in cashflow does not substantiate the costs to refinance. 

@Jason Park hit the nail on the head in terms of "it depends on your goals". What I'd add onto that is that it depends on how much cash out you're going to get from refinancing and what you can reinvest those cash out proceeds into once you have them. If you're just looking to lower your payment, then take the total costs its going to take to refinance (at the very least 5k) and then divide that by the monthly cash flow improvement you'll have by getting lower rates. That's how many months its going to take you just to break even and for it to START being a good decision to refi. 

If you can't get cash out, consider the likelihood of your market appreciating further/bouncing back from where the market currently is, as well as whether you can do any value add to your properties to boost their values. In most cases, if you're trying to grow your portfolio, doing a cash out refinance without getting enough cash out to be able to reinvest to majorly help you with the down payment on your next deal is probably going to slow your growth and ability to scale. 

We're always happy to chat numbers with you to help you through these decisions. But either way, we wish you the best of luck! Aloha. 

This is very informative and as good as gold. Thank you for your insight, it gives me alot to think about.

Quote from @Carlos Quiros:

New investor here

I have 2 rental properties (duplex & triplex) that I bought at the highest interest rates (8%), they DO cash flow but now that rates have softened a bit my question is when do you all as investors decide to pull the trigger on refinances? A full point? 2 points?

Just looking for constructive feedback....

Carlos

 Hey Carlos,

I guess it depends on your goals, how much it's appreciated, etc.. Just looking simply at rates may trap you in a way.. As my advice would be to look at what you want to achieve, is it higher cashflow? Cash out to invest in other properties? 

Has your properties appreciated a bunch where sitting on tons of equity just doesn't make sense? Remember, that it costs money to refi...if its a small amount of juice to squeeze, I would just run your numbers to take a look at what makes sense for you and your journey. 

Hope this helps!

Hi Carlos! 

Is the property vacant or occupied? 

If it is vacant, you feel confident and comfortable with the other contractor after doing your DD AND they have a lower quote, why not give them a go? It is extremely common for PM companies to accommodate for external contractors - as mentioned above, it is your property at the end of the day. 

However, if it is already tenant occupied or you have tenants moving in on a certain date, it may be worth soaking up the additional 15% to use the PM contractors. It all depends on risk appetite. Personally, I would use the PM contractor in this scenario. Firstly, the PM trusts that contractor and has a working relationship with them. Secondly, their contractor more than likely recognizes that repairs/work on investment properties are extremely time sensitive and understands the standards expected. On top of that, is the external contractor you've chosen familiar with tenant occupied properties? Just a few things I would consider. 

Sometimes, paying a little extra is worth it to limit your risk!