All Forum Posts by: David Rosenfield

Thanks Carlos and those were my thoughts exactly.  Much appreciated for making me feel better/more comfortable!

Thanks Stephanie and while I get your point I've since come to realize I can get delayed financing up to 6 months after closing or a cash out refi after that.  Considering I'm sitting on the cash anyways and haven't yet identified my next property, my current inclination is to pay cash and then pursue one of those approaches once I identify my next property.  Even in 6 months I'd save 5-10K in interest, closing costs etc.  And the condo is off the beach in secured community so while I get your point I feel pretty confident nothing terrible will happen in the next 6-12 months.

Gotcha and makes sense/that's what I'll plan to do. And this Myrtle Beach property is a unique one in that I want/plan to live there a few months/year and eventually have as a retirement home. So a 8-10% COC plus 3-4 months of living there seems like a good enough deal to me. Thx again for your thoughts and glad to hear cash seems like the move for now.

Thanks @Mark Munson but I wasn't really looking for another lender/better deal. I primarily wanted to know if people thought I should take a DSCR loan (be it at 7 or 8%) or pay cash. After learning I can get delayed financing up to 6 months after close (for a lower rate than DSCR) and/or do a cash out refi at the same rate as DSCR, I'm likely paying cash now. Seems silly to pay 6 months of interest when I have the cash and don't need to use it until next purchase which I haven't identified yet.

@Myrtle Mike Thompson I don't qualify because I don't have two consecutive years of W-2 income bc with my 10+ years of savings I prefer a 1099 job that allows me to travel 3-6 months/year. I'm aware of the difference in condohotels, warrantable properties etc and this particular property isn't an issue but I need a DSCR loan regardless. In any event at this point I'm inclined to pay cash and then just take out a mortgage (or HELOC) after the fact if I need to raise more capital. Thx for your thoughts and I'll let you know if anything changes.

Thx @Issac San Miguel.  I tried to DM you but keep getting an error message.  Happy to share my "full picture" but perhaps you can try DMing me or look me up on LinkedIn (David Rosenfield).  Thx much and hope to connect!

Thanks @Issac San Miguel and much appreciated! I shopped around with several lenders and surprisingly (even with my 780-800 credit score) this is the best I got (Easy Street Capital). The local lender wanted to charge me an even higher rate when I wanted to put more down, and another lender wouldn't let me close on another deal that was going to end up literally 2-3K short/year even though I was planning to use it for several months which still seemed like a win to me. If you're aware of another lender that will give me a better rate on a mere 110K loan with a 50% LTV, I'm all ears. The rate was 8% with a 3/2/1 prepayment but when I wanted a 1 year prepayment it jumped to 8.375 which is only another $27/month. But man I'm torn between taking the loan and keeping the extra dry powder or paying cash.

Thanks Benjamin and interesting strategy re the business line of credit. I hadn't thought of that. Any idea what the going/typical rate would be? A quick Google search suggests 9+%. While I do have the money "ready to go" (and another approx. 200K liquid on top of that), it's mostly in stocks/bonds which admittedly are pretty flat for me right now (ie, little to no capital gains hit). My Charles Schwab guy (obv biased) says I should pay as little as possible and take out the 75% loan. So the 50/50 split seems like a reasonable compromise. But to your point if you think I could just as easily get a line of credit/mortgage after the fact if needed, maybe I shouldn't unnecessarily pay 8% for a year or two. Frankly, my plan if I don't find another property to buy in the next year was to just pay off the loan with no penalty. In a year I'd be paying approx. 8K in interest (better than 13% at 75 LTV). So basically, my question is is it worth paying 8K for a year for the right to hold onto another 55K that I might want to use for a down payment on another property? Frankly, even if I paid cash for the whole property, I'd still have another approx. 200K in liquid dry powder, but putting half my liquidity (as opposed to say 1/4-1/3) into one property isn't enthralling to me. But your point is valid and now you have me thinking just pay cash...

Thanks Ned and yes I've accounted for all costs/expenses including management fees. And while I understand your point, the reason it excites me is because I'll plan to live there 3-4 months/year so when you factor that in the COC jumps to more like 8-10%. I own a 2 BR condo in Denver that I rent out half the year and it does 2x my mortgage in those 6 months, thus I need somewhere else to live 3-4 months/year. I love to ski (Denver) and golf (Myrtle) so getting a place in latter where I can spend 3-4 months/year and get my mortgage covered the rest (plus a little extra) seems like a win to me. I spent the last 3 months in SC/FL looking for this type of property and this is the best deal I found (I don't want a SFH as I don't want to live in one and frankly think they're riskier than condos with low HOAs for STR purposes). Thus the only question in my mind is whether I pay cash or take the loan. After much deliberation I'm leaning heavily towards a 50/50 loan with a 1 year prepayment. After a year, I'll either have used that $$ I saved to buy my next property, or if not, I'll pay off the loan without penalty. That seems like the best compromise/middle ground approach to me but curious to hear others' thoughts. Basically, it will cost me 8K in interest for a year for the right to hold onto another 50K that I'm planning to use as a down payment for next property. And if don't find that property I'll just pay off the loan in full after a year. At the 75/25 LTV however that 8K is 13K. Thus, 50/50 seems like my sweet spot.

Hi all. First time poster here but really need some advice. I'm under K on a 2 BR/1 bath condo in Myrtle Beach that I've spent several months looking for. It's a good deal: 210K and I'll at worst break even in 8-9 months (and be able to use it the other 3-4) but potentially could make $$ depending on whether I pay cash or take a loan. To that end, I'm not eligible for a conventional loan so I applied (and was approved) for a DSCR loan at 8.375% with a 3/2/1 prepayment penalty. I'd almost surely refinance or pay it off in year 2 or 3 but in those 2-3 years I'll have paid approx. 13K/year in interest alone plus another approx. 5K in appraisal/closing cost/prepayment penalty fees. I have the 210K cash but it represents approx. 1/3-1/2 of my liquid net worth, with the other half being illiquid. If I pay cash my COC return will be approx. 8%. If I take the loan it goes down to approx. 2.5-3%. The ONLY reason I'd take the loan is to save some "dry powder" for my next purchase as I'd like to get 2-3 more properties in the next few years. But the thought of paying a lender 8.5% when I have the money sitting in stocks/bonds which almost surely will not go up 8.5%/year over the next several years (and potentially could go down a lot) is very unsettling. Curious what others would do in my position and also if I pay cash, how feasible would it be to get a mortgage after the fact and/or a HELOC loan in the event I wanted to raise capital for my next purchase? Thanks for any thoughts/advice and greatly appreciated.

Slight update: I've since realized I put 50% down and my rate with a 3/2/1 prepayment goes down to 8%.  Or at 50% down with a 1 year prepayment penalty the rate is 8.375%.  I'm inclined to go this route with the 1 year prepayment option.  But curious to hear others' thoughts.  Thanks much all!