All Forum Posts by: David Lilley

I own a 6 unit multifamily property (non owner occupied) in Tampa and I would like to open a line of credit secured by this property. Any recommendations for lenders who offer this product in Florida? Thanks in advance everyone!

@Account Closed as long as you meet the lender requirements below you shouldn't have an issue. They might also want to see 6-9 months debt service liquidity.

• FICO® score at least 580 = 3.5% down payment.
• FICO® score between 500 and 579 = 10% down payment.
• MIP (Mortgage Insurance Premium ) is required.
• Debt-to-Income Ratio < 43%.
• The home must be the borrower's primary residence.
• Borrower must have steady income and proof of employment.

I would attempt to sell as a portfolio and 1031 into one large asset. No question. Wouldn't you want a $5mm property appreciating by 10% a year versus a $1mm property? 

@Colin C Barrett every resource you need to close your first multifamily deal is here on this forum. FOR FREE. Every one of these guru groups that charge an exorbitant amount of money to hold your hand is capitalizing on your laziness. Be honest with yourself. If you are too lazy to learn the information that is readily available why do you think spending 12k will change that? 

Is it fear? There are countless members on this forum who would not mind in the slightest to give you some input on any deal you are considering. Once you have the knowledge the only thing stopping you is YOU!

Given your cash flows will be tight I think the high interest of a HML would not make sense but you will just have to run the numbers to see. You would also pay at least 1-2 points with HML most of the time.

I think the only downside would be living in a bad part of town but you would only have to suck it up for one year and then you do not have to occupy at that point. However, a wise man once said never invest in the hood.

If you want to keep acquisitions costs low, a mortgage broker will add 1 point to your costs. In my opinion a broker wouldn't be necessary for this type of deal. Josane is right though, credit unions will typically offer the best terms. You are going to have to get on the phone and talk to a lot of banks. Target FHA lenders and find out what their criteria is. Do this before you have a deal under contract. There is also free down payment assistance out there for FHA loans where they will give you down payment money. Not sure if it applies to multis but would be worth looking into.

Give this article a read: 

https://www.biggerpockets.com/renewsblog/fha-guidelines/

@Llewelyn A. I always view appreciation as an added benefit; the deal must stand on it's own. That is a good return but a lot of investors don't want their money tied up 18 years. Example: if you were to make a 20% IRR every 3 years, cash out, and do that every 3 years for 18 years you would have doubled the return that you made in the same amount of time. Just something to think about.

@Account Closed keep in mind cap rates are irrelevant with anything less than 5 units so forcing appreciation is out. You would be at the mercy of the market. But, buying and occupying a quad with an FHA loan like Randi mentioned gets your feet wet with a lot less out of pocket. This makes even more sense if you haven't bought a primary residence yet.

Proximity to the asset doesn't have much to do with the need to be represented during the acquisition. Yes, overseeing renovations will definitely be easier but I would focus on ROI. If I wasn't buying with the plan to live in one unit I would buy in a market with higher caps so you don't have to put 30-40% down.

You could be waiting years for the next correction and who is to say it will be significant? Buy in a strong area where a correction will have a limited impact and make sure your loan term is long enough to ride it out if the market dips. Don't wait to get in the game. 

If you absolutely plan to return I would rent it out but I would not do any sort of cash out just in case the market takes a hit. 

I had a feeling that would be a suggestion. Thanks Josh!

Anyone have a good spreadsheet/program to account for investor contributions, real estate acquisition costs, net income of property, and investor payouts?