All Forum Posts by: Eugene Rogachevsky

@Account Closed yes there are HOAs of 400-500. There are also those of 150. And 750. One of my condos was 146. My current is 251. The point is if it still cash flows, who cares. You decrease your insurance premium. Cap ex is reduced as well. It's almost impossible to make money in SoCal right now. We have cap rates at 3-4%. SFRs are an absolute non-starter. 15 offers on a 650k with an all cash taking it for 700k. Those pull in 2200 in rent. That's why my initial post was for him to not dismiss condos simply because there is an HOA. It's still tough to make money from those but you'll have a better chance than SFR. And all this is presumptive on him investing in CA. I recommend out of state investing for CA investors. And if that's the case, then maybe a Condo with HOAs in those markets doesn't make sense.

@Marty Summers like @Chris Mason mentioned, keep making calls. Typically investment properties will require 20-25% down and give you a 30 year but I was able to get 15% plus small PMI through a lender in Chicago. PM for contact info. Maybe theyll be able to do something similar in Indiana.

@Mo S. I wouldn't completely discount the Condo approach just because of the HOA. My first LB property was in downtown and it had a relatively low HOA. It would have cash flowed from the beginning 4 years ago had I not bought it as a primary. I bought another one in downtown LBlast year as a fix and flip but the wife and I ended up moving in there. I forced some equity into it with the rehab but it has appreciated about 80k since last March. Yes the market is hot right now in LB but I wouldn't have been able to realize these gains had I been hesitant to pull the trigger because of the HOA. Also, I couldn't afford a house in LB and the numbers didn't make sense anyway. But I could afford a condo. That purchase last year will allow me to parlay into a house for us next year. My recommendation is to just get started. Like a couple people mentioned, figure out your personal investor profile and then get into something. Maybe it won't cashflow great, but at least you'll get your first one under your belt and be on your way. Use the calculators available through BP to underwrite deals. If you ever wanna get a coffee or beer in LB i'd love to be able to help in any way i can. Send me a PM.

Good luck! 

@Cody L.  ya when I buy in CA property taxes are prorated. It turns out that in IL first installment due on March 31,2017 is to cover first half of 2016. So it makes it a little tricky when it comes to the purchase. I don't think they're able to totally quantify what the 2nd installment will be. 

I spoke with my lender tho and they will send updated closing docs that will have seller credits in there. Hopefully it'll be rectified. Slated to close in two days. 

@Cody L. Unless I am mistaken, and according to what the TK provider told me a month ago, property taxes there are paid for previous year in the current year. So in 2017 I'm actually paying for 2106 taxes even though I didn't own the property in 2016. The TK provider said it's possible to appeal the amount and get it reduced. I was hoping someone had some previous experience in dealing with this in IL. 

I'm in California and I just closed on a couple of properties in the Chicago area and the taxes are incredibly high.  I knew this going in but both were good deals regardless. The triplex is currently (or in arrears) taxed close to 14,000k per year (155k property value). I was told that it is possible to appeal this amount. Has anyone had experience with this? What's the process? How successful is it? How long does it take? Who would be the one to petition (me as property owner or the turnkey provider that's managing property)? 

I'm still cash flowing close to $750 per month on it but even a tax reduction of $1000-1500 per year would be tremendous. 

Thank you in advance!

Eugene

@Ryan Aylward  "live where you want to live but invest where the numbers make sense"--Robert Helms 

One of my favorite quotes of all time. With that said, move to LA. Just don't invest here. There is an exodus of investor money from CA to Midwest and South. I've just closed on two in Chicago-area. Why take 4% cap rates in CA when you can make 9-12% caps elsewhere (TN, IL, AL, OH) with 20-25% CoC?

There are hardly any opportunities here right now and the people that are finding them are few and far between. Granted, if you're moving down here in say 5 years, the landscape will be much different. 

@Doug Bish your math is correct but I think there might be an issue with the refi. I know you used those numbers for an easy example but lets just say those are true in your market. It'll be difficult to find a lender that will want to cash out refi at a low amount like 60k. They won't make any money on the front end through fees and what not since I believe they are capped at 3% max of the loan amount per federal guidelines. So you 60k refi @75LTV would be a 45k loan, which would essentially max out at 1,350 in lender fees. I doubt you'll be able to find a lender willing to do this. Thus, you might be stuck with a property you're 30k into, unable to refi and paying whatever variable interest rate your HELOC is at. Perhaps the better option would be to do that and then flip it to a retail buyer. you'll pay capital gains taxes but it might be a way to make a small chunk. Rinse and repeat that.

@Erik Jason how much CC debt is there? What's the value of the property? How much left on all loans? 

@Melissa Nichols I'm sure you've already ran the numbers and considered the monthly interest on the HELOC into your cash flow numbers. But since HELOC rates are variable and interest rates could potential be raised twice more this year, take that into consideration when crunching your numbers. The BRRRR strategy is great for a HELOC but only if you're able to pay down the HELOC in a relatively short time. The seasoning period to refi an investment property is typically 6 months from initial purchase close date. So you'll at least be paying 6 months of interest on it plus the interest on the rest of the financed portion. Make sure you're still cash flowing with these things factored in. Also, take into account the closing costs for a refi. Unless you buy 20-30% below retail cost, there might not be a way to come out ahead on the refi 6 months after purchase. I'm all for leveraging but just make sure numbers make sense if you need to keep HELOC out there for 12 months or longer and interest rates go up a point. Additionally, taking a HELOC out on an investment property comes with higher rates than doing it on your primary. So shop around for % and LTV.

Good luck!!