All Forum Posts by: Dillan Ruthenberg

Thank you! That was helpful.

Current I use Quickbooks Online.

Curious what everyone does for regular bookkeeping?

1. Sales Receipts as payments come in? 

2. Recurring invoices and match payments?
- If you do this method how do you account for last month's rent? (We don't have a security deposit in Canada)

3. Something else?

@Matthew Carlson

In Canada at least,

I had to have 20% Equity in the house before I was able to get another one.

Wasn’t allowed to have multiple houses with 5% into it. Maybe this was misinformation but I don’t think so.

Had to refi & get a HELOC after renos to get the equity to the 20% level before I could do it again.

Any input ?

I recently attempted a 2 second Canadian style brrrr with a hiccough along the way. I am wondering if I truly need to wait or if there is something I can do to expedite the process?

Timeline:
Property 1
Purchased Jun 2016: Purchased for 5% down @ 255k, refinanced about a year later at @ 325k with some minor renovations completed, and got a HELOC Oct 2017 for 20k and had 20% equity in the property vs 5% when I had purchased

Property 2: 

- Purchased in February 2018 for 192k and had it reappraised in March/April for $222,500 
- This was super low based on comps and I asked for a review based on the brokers opinion of value as well and he said he could not review it
- After this the lender informed me that he could not even do the refinance with the appraisal because my DTI was off
- He recommended waiting a year or so until the rents from the new property show up on my tax return and to pay off some debt for the ratios to start working in my favor

My realtor provided me some provide private lending info who were able to offer NO refinance on property #2 but they could do a mortgage on a new property we were looking at for 20% down, & 10% interest.

I did not have 20% ready to go as I was banking on the refinance for at least a portion of the funds and had to turn down the offer.

Curious if anyone else has encountered these roadblocks and If I need to wait or if there is something I can do. 

I was initially surprised b/c my lender has been great and has always included about 80% of new rents on a potential purchase into the equation. Both properties cash flow very nicely (about 1k each)

Hi Roy,  my banker has told me that yes all he is getting with the purchase appraisal is a confirmation that the financing supports the property value. 

I just meant, at least in our area and from what ive seen posted on here that that it is VERY rare that the purchase appraisal ordered by the bank comes in at a # different then what you paid.

So for example,

You purchase for 100k
Comparables are 175k

You tell bank hey the comparables are 175k, and I just bought under market and there are no distinguishable reasons why my property should not be valued at 175k.

Would they not argue that the value you paid is the value of the property? 

Is there a way to get the bank to only look at comps to value the property rather than the price you pay for an "arms length transaction"? I know this could pose some risk if you are over leveraging and the properties are getting valued higher than they are worth but I dont think this would be the case so I am not seeing any risk. 

I am going to spend the next couple days speaking to my bank and other local banks to see what their valuation methods are and see what  I can but was hoping you maybe had a shortcut.

Even with a distressed sale with under market rents - would the value not be the value you paid for it (being devils advocate). 

Appreciate all the info!!

The bank ordered appraisal was 224,000 a couple weeks ago and I am set to close on it Jan 18th I’ve had a couple bank ordered appraisals done and they always come in at exactly purchase price. So when you got the bank appraisal done how did you get them to ignore the price you paid (on the property you bought far below fmv)?

Thanks a ton for the quick reply.  
I know the bank is aware that purchase appraisals rarely come in at anything different then the purchase price of the property - unless the appraisser knows the asset is significant overpriced and they don't want to place the lender in a bad position - then the appraisial would come in low.

How did you approach the conversation with the lender?

I basically have to say - scrap that purchase appraisal - now lets get a real appraisal based on comps , and make a detailed package for the appraiser/bank showing what comps I and using the come to that conclusion?

The inside condition of the properties I am using as comps are of equal or lesser value to mine as well (my realtor sent me the closed listings so I was able to see the inside as well). 

Thank you for the detailed response Roy! I know we don’t technically have a seasoning period like the U.S. does. My current plane is a conventional mortgage 20% down. Do not have the cash to purchase all cash unfortunately. How do you Suggest going about this knowing that I am going to be putting 20 percent down initially and will have a conventional mortgage on it? After 45 days will the bank be willing to Beeson on surrounding homes or will they still use the sales price of the subject property? I feel like there are so many factors that like you said go into the price of the property. Not all markets are completely rational. Really looking forward to your response and thanks for the info!

Okay thank you. What is the time window for that to pass by? In the meantime I will proceed with the repairs but I just figured it was possible to purchase and immediately have equity based on comps. Usually the appraisal @ sale comes in at exactly the value you paid but this time it came in 2,000 above. Does this lead you to believe that the appraiser also thinks it’s priced under market? I’m not trying to skimp on repairs and the first R in the BRRRR process but if it’s just a matter of me calling 5 banks and ordering appraisals (5*$500=2,500) - that is allot cheaper and will take less time then doing repairs. Thoughts?