All Forum Posts by: Mark J.

OK @Adrian Smude - here's your upvote. Check is in the mail! ;)

@Kevin Darrell - if you're looking in the Tampa (Hillsborough County) area, PM with any questions. Always happy to talk shop. ;) 

I'm just a newbie, but I'll pass on whatever knowledge and experience I've accumulated (for better or worse) over the last two years! I can only offer just one guy's perspective, and so I would take my, and everyone else's opinion, with a healthy dose of skepticism. Your mileage may vary.

@Tom Scott - HA! Thanks... Perhaps I should become a realtor and improve the world of real estate. If I ever did, I tell you what my #1 priority would be-- INSANELY GREAT communication. How a realtor let's a call go to VM or doesn't return texts or emails for hours or days just baffles me. I'm seeing three MF properties tomorrow and was AMAZED that one of the realtors answered the phone immediately, gave solid substantive info, told me he'd call me back later in the afternoon with a time he could get me in to see the property...and sure enough, he did exactly what he said he would. I almost cried. (not really). BUT-- the point is I'm just so accustomed to realtors being lazy, unavailable, unknowledgeable, unresponsive, and generally unorganized that when I encounter a professional agent with great communication and follow through, it's like meeting E.T. the Extraterrestrial.  

Sorry, typo -- 33504 zip should be 33604

I monitor the MLS everyday and look at every MF in Hillsborough County. When you say "apartments" do you mean complexes or duplexes and such? The majority of the duplex/triplex/quadplex properties are in East Tampa (33610) and NW Tampa (33504/33612), and scattered far and wide along the 1-4 and I-275 corridor, which are generally considered to be a low-income areas. Rents are low, but properties are cheap and commonly run-down through poor upkeep. The most common MF is a duplex, 2/1 with about 600-700 sqft on each side. Most are garden level, although a few are two story, particularly in the Sulpher Springs area, which I think is a better investment than East Tampa, particularly if you can get property near the Hillsborough River. However, Tampa is a bit strange and you can find MF properties plunked down in the middle of a SF neighborhood, so there are lots of options.

I'm definitely seeing an uptick in MF listings within the last three months as investors who bought at bargain basement prices ($20-30K) in 2011-2013 are now cashing-out around $100K. Section 8 housing generally supports a $750-$850 rent for a 2/1 and higher in other areas.

Not sure if this is the market or info you're after, but feel free to PM me if I can help in any way.

Oh, and @Joe Villeneuve - I like how you phrased the difference between "using" your money and "spending" your money. Money as a recyclable, renvenue generating resource is definitely the best strategy (particularly when there's a limited amount of it in my case!) ;) 

@Robert Curls - Actually, I've always had a question about blanket loans. Wouldn't that essentially lock-up for your portfolio and prevent you from selling property secured by the loan or would you need to swap in a new property of equal value if you sell an existing one? Thinking as the bank, if there's less collateral securing the original loan, risk goes up. How do this whole thing work?

In my case, I wouldn't have the capital to buy x5 properties out-right and fund the renovation on each before even being able to get a blanket loan. Perhaps I could do it on two or three properties. Is there a minimum amount for a blanket loan? How are rates / terms affected by this type of financing?

THANKS!

Thanks @Joe Villeneuve-- agreed it's not a flaw, it's a limitation. But as an important limitation (for many markets & properties), I haven't seen it discussed as prominently as it probably should be. As a freshly minted newbie, I didn't know about this refi limitation until I started shopping around for rates near the end of the renovation project. Not so smart, right?! I called & visited over 25 banks, from small local ones to large chains to get the rate/terms I wanted. Fortunately, the numbers still worked out for me and I met the minimum refi amount, but I think it's something that newbies need to be aware of as part of the BRRR strategy. Perhaps call it the QBRRR model. Q for Quotes. ;) Hah! Doesn't really roll off the tounge now does it?! ;)

Also, would you mind sharing the names of the lenders who do cash-out refis at $50K? That would expand my options for sure. Do they offer rates/terms similar to higher loan amounts? Not sure I understand / agree with your assertion of BRRR as just an exit strategy. The power of BRRR is that it's a total strategy: entrance, process, exit, and next opportunity.

Watched your webinar last night and, perhaps I missed it if you mentioned it @Brandon Turner, but one important consideration for me when I use the BRRRR strategy is price point, not only of the purchase price, but more importantly, of the ARV.

In my model at least, the BRRRR strategy will only work on properties with an ARV of at least $100K because when you go to do the cash-out refi, banks typically aren't interested in doing loans for any less than $70K. There just isn't enough money to be made from loans smaller than that.

Consequently, since most banks only offer a cash-out refi of 70%-75% of the property's ARV, the ARV's going to need to be pretty close to $100K to meet that $70K threshold. So, that limits my acquisitions to properties only in the range of $60-$80K, with a $10K-$30K reno budget + hopefully a small market appreciation to push me to the $100K ARV mark.

This is something I think is important to mention to newbies who may be thinking about buying the cheapest property possible, say $40K, and then sinking $25K into a reno, and now have $65K invested and can't find a bank that will give them a cash-out refi. Now, they're dead in the water and have all their capital tied up and will likely be forced to flip it, unless they go to private lenders or perhaps pay a very high rate at a bank.

Now of course there are plenty of other creative refi options available, but I'm just not experienced enough yet to be able to use them. ;) Gotta watch more webinars!!

BTW-- I also got lucky on my last deal since I was able to find a bank that would give me an immediate cash-out refi, although at a 1/8 point higher rate and at only 70% of ARV rather than the 75% I've achieved on another property. Although that cut slightly into my cash flow and locked-up a bit more cash (as equity) than I wanted, the numbers still worked. I just couldn't wait six months or a year in a rapidly appreciating market like Tampa, FL.

Thank you Natalie. That's just what I was thinking. I used a CPA for the first time this year, and asked him about it. He wants to refile (for a full tax preparation fee of course). I'll try to resolve it first and refile as last resort. 

Very much appreciate your response.