All Forum Posts by: Guifre Mora

I bought my first house for $105,000 and put $5,000 down ($65/sq. Ft). Houses in my neighborhood are selling around $105-$115/sq. Foot with updated kitchens and fresh paint. I believe I can accomplish this with $20k, but I don’t have $20k. How should I go about getting these funds the best way?

Do you still owe 100K?

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Originally posted by @Edward Figueroa:

Hello,

I am wondering if there are any Hard Money Lenders in the Dallas,TX area that offer

offer what exactly ... ???

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Originally posted by @Angela W.:

Hello- I would like to buy my first rental property .Any ideas or suggestions were first time investors start? Such as financing?

Thanks ,

Angela

How much downpayment do you have to put down and how much is your purchase budget?

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Originally posted by @Steven Eastman:

Looking for my first deal and trying to educate myself. Here is something I am looking at in the Denver market. Even in Denver is $130 to slim of cash flow? Also, how heavily do you rely on Cash on Cash? This would be purely investment and therefore I need to do a conventional loan and downpayment. Plan would be refi in the future hopefully. All advice is welcome. Cheers!

IMO HOA kills all deals unless you get a property with an amazing price and really high cash flow return. You are giving them your cash flow. Imagine if you could keep the 240 HOA. $370 in cash flow. Look at your ROI percent ... [4.25%] - might as well invest in Roth IRA accounts. It is very low.

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Originally posted by @Christopher B Shires:

This is my first investment property, I have a opportunity to purchase a 4plex with a partner. I'm securing the loan and he is helping with the down payment. The property is 675K and after analyzing the deal, it cash-flows. I originally qualified for 680k with my lender two months ago, they are now saying because of the pandemic, they are only comfortable lending me 480K.

My questions- Is there other ways I could get this deal done?

Should I try and get another partner to come in me?

Should I try another lender?

Chris, it's happening all over the place. Don't worry if its a deal it can be funded. Let get to the nitty-gritty of the deal.

Location of the asset? and down payment LTV?

Under Contract?

Escrow & title have been opened?

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Originally posted by @Cirilo Villar:

So ive been trying to get a wholesale deal for months now I have put so much effort and tried so many strategies with no avail. However I have been, simultaneously, getting my credit score up. How can I use my credit to buy my first property especially now that we are in a recession. I do not want to miss an opportunity.

Cirilo, what are you trying to get a fix and flip or fix and hold?

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Originally posted by @Robin Hudson:

Hello everyone! I have a couple of questions about a Contract Assignment in California. If anyone can assist, I would greatly appreciate it. I live in 1 county and the property buying/selling is located in another county. Is it required that I choose Escrow/Title in that same county, or can I use one in my own county within the same state?

Secondly, if anyone can recommend an investor-friendly escrow & title company in the Los Angeles or Orange County areas, please shoot me a note. Looking for experienced escrows who deal with assignable contracts.

Many thanks!

county within the same state? Neither you can live in Germany and can close escrow in CA. I've closed escrow with the seller in Atlanta, the buyer in Cali. It just takes longer.

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Originally posted by @Michael H.:

I'm looking at a multi-tenant property with 2 anchored tenant. The property is 75% occupied with a cap rate of 8% in a dense location with higher than average household income. The property price is $1.6M

My my understanding, I will need 25% down payment plus 5-10% liquidity. So I will need roughly $560k. If I can come up with $300k, can I use a bridge loan or private loan to make up the rest ($260k)? If a bank was underwriting this loan, will this be an issue? Are there any other ways to make it work?

Can I use a bridge loan or private loan to make up the rest ($260k)? Yes, there are lenders who do a second position equity JV.

If a bank was underwriting this loan, will this be an issue? Depends on the lender/Bank, some may not allow it some will as long as they are in 1st position but may cap how much debt you can absorb to acquire the downpayment, this means you are over-leveraged and a risky borrower.

Are there any other ways to make it work? Seller finance second, refi out of the second in 12-24 months when you are at 100% capacity.

When you talk to your lenders ask what is the networth requirements and experience. In my experience this kind of transaction, we would be asking 1:1 networth and previous experience.

Ask before you get dragged into a contract and this comes up in UW.

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Originally posted by @Lauren G.:

My husband and I are currently looking to buy a rental property with owner financing. The loan application form he asked us to fill out asks for other real estate owned. We do own another property, but it is in an LLC. I think it's in our best interest to not put the other property on the application. My question is are we legally bound to put that property on the loan application even though it's in an LLC?

All mortgage loan applications including seller financing may contain these questions so if it does you should answer. The seller has to be in compliance so should you. It helps you establish your experience as an investor as well as your liabilities. If you default or have to be in litigation with the seller you are misrepresenting your self and information contained in the application it can result in civil liability and fraud.

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Originally posted by @Cliff Sands:

Originally posted by @Guifre Mora:

Originally posted by @Cliff Sands:

Thanks all for the replies so far. I may have skipped a few details on the explanation, my apologies. The list is $575k but the $4000/mth mortgage payment takes into account the total acquisition cost (VA fee, closing, etc.) The actual note would be around $610-615K.

It seems this may not cashflow quite like I thought as I may have underestimated some of the holding costs namely the management/turnover fees. At 10% management fee and 4-5% annually for acquisition costs that would leave little room for any repairs/maintx even though they may be minor with a new build. On the other side however, I’ve been rather conservative in my rents estimate and $1250-1300 is achievable especially for the end units which are a tad bigger and afford only sharing of one wall (I would live in a middle unit).

If I were to forgoe the immediate cashflow, assuming rents could increase yearly, the deal should still net a decent 5 yr ROI from the mortgage buy down and appreciation. I use 5% annual appreciation in this market as it seems to average out, long term, here. The buy down would put me at $550k remaining on the note; leaving a delta of about 150K year 5. At half the appreciation it's still $100K equity at year 5.

RE: Guifre

1) Purchase: $575,000

2) Total Annual Operating Income: $43,000 (1,200x3x12)

3) Total Annual Operating Expense:

a) % Vacancy: 5%

b) RE Taxes Property: 15K

c) Hazard/Insurance: 2K

d) Repairs & Maintenance: 200 – first 2 years (warranty) / 1000 – annually after

e) CapEx: 0

f) Utilities-other: 0 – tenant pays all utilities/lawn, etc.

g) HOA: 0

4) Actual Capitalization Rate: not positive on this but anticipating 5%/annually

5) Loan Information

a) Down Payment: $0

b) Loan Amount: $575,000

c) Acquisition Costs and Loan Fees Rehab Funds: 35-40K

d) Length of Mortgage (years):30

e) Annual Interest Rate: 3

6) KPI's: don’t know what this is (key performance indicators?)

a) DSCR:

b) 1% rule: 5750/month – hard for new build this is closer to 0.08

c) 50% rule:

d) Cashflow (before taxes): 2200/mth

e) ROI: well it's no money down so calc would say infinite?

Thanks again for all the feedback…please keep firing away with the back n forth analysis, it’s much appreciated.

@joseph – this is the unit at showdown path

Cliff, I see a few issues with this property and your assessment. RULE #1 the Golden Rule -CASH IS KING.

Let's assume all your numbers and assumptions are correct.

DSCR: .70% ideal is you are at 1.2% meaning rents pay the mortgage and 20% extra.

1# rule is .68%

50% rule 53.5% you are still missing Capex but I'm assuming your warranty for $1000 per year.

Cap rate 3.79% if you wanted 5% the purchase price would be 435K. This is because you are not utilizing the 4th unit as a rental. So let's use 4 units rented cap rate of 6.36%.

ROI 23.37% because there is zero money down

Annual Cash flow -9347 (-779 mo)

If you were to hold it for 5 years and sell it you would make 21,380.

Year 5 appreciation 690,000

Year 5 Intrest paid 87,346 ; principal 68,225, outstanding balance 546,775.

That would be 143,225 equity minus closing costs 5% (34,500) minus interest paid 87,346 = 21,380. This is if you don't have extended vacancy, repairs or loss of income to pay your part.

Really appreciate you taking the time to explain this. I'm not sure I totally understand all of it. In particular the 21,380. The calculation is deducting interest from the equity but that interest is already paid through the rents. That is to say...fast fwd to 2025, the property is valued at 690,000 and the outstanding balance is 546,775. Accounting for closing costs...143,225-34,500 = 108,725. Why would also subtract out the interest that was already paid over the previous 5 years?

This is what actually Is costs you to get your equity, you are paying every month out of pocket.
look your property looks good if all 4 units where rented your analysis that it will appreciate with out doing any value add is a bet on appreciation and rent increases year over year is a huge gamble and only pays off when you sell and if you sell at that price at the right time.
You are not making any money year over year on this property even with rent increases.

It’s a home with roommates not an investment property. If your original question was is it a good investment property yes if you have all 4 units rented.
This is what I’m trying to show you but if this is how you see your self investing...I tip my hat and wish you good luck.

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All Forum Posts by: Guifre Mora

Guifre Mora has started 2 posts and replied 838 times.

Post: Funding Remodel Project

Post: Property has no living owners in TX

Post: Financing/ Down Payment for rental property ?

Post: Opinion on deal analysis

Post: (4Plex) Multi-unit Financing Guidance (Please Help)

Post: I have a 750 credit score how can I start REI

Post: California Contract Assignment / Escrow question

Post: Loan for Commercial Real Estate (Retail Center)

Post: Loan Application Question

Post: New Investor - 4-plex opportunity analysis help