All Forum Posts by: Jack Zhuang
Jack Zhuang has started 15 posts and replied 67 times.
Post: 30 year mortgage vs. refinance. Pros vs. cons?
- Posts 67
- Votes 33
Hi Andrew,
Also, a lot of people on BP here warned about not over leveraging. That's why I'm wondering if it's smarter to lend against my own credit or my asset assuming the cost of lending (interest rate) would be similar.
-Jack
Originally posted by @Andrew Postell:
@Jack Zhuang is your current lender telling you that your DTI will be maxed? Are they counting your rental income? Every rental property you buy should IMPROVE your DTI....unless you aren't renting the properties? Or aren't buying properties that don't cash flow? I'm not sure why anyone would do either of those...and that's why I'm working under the assumption that your DTI should be view A LOT differently. Let me know if you know the answer here. To me, your should look BETTER to a lender after buying rental properties.
Post: 30 year mortgage vs. refinance. Pros vs. cons?
- Posts 67
- Votes 33
Hey guys,
I hope to buy more real estate after the holiday season. I have two options for financing with my current lender, either take out another 30 year montage on my W-2 income or refinance on one of my rental properties. But I'm not sure which option is better for me in the long term.
Here are some details:
Last time I checked, I got quoted low 4s for 30 years with 25% down and mid 4s for re-fin. This would be my 3rd montage on my W-2 income and I would be maxed out on my income to debt ratio. My concerns is that I will not be able to have access to like a car lease or a small loan for a loooong time until I can bring the ratio down a bit. I'm still single in my late 20s and I don't want to over stretch myself at this stage of life.
On the other hand, I can extract my equity out of one of my rentals to support another buy. It seems to be a smarter thing to do but there are some issues. First, my agent wants me to take out the re-finance before going shopping which means I would be paying the interest before purchasing anything. The market is slow at the moment and I don't know when will I buy anything and start generating income. Secondly, the interest is definitely higher and increases my operating cost. What do you think what I should do??
Happy holidays,
-Jack
Post: Should I give seller a property tax refund after closing?
- Posts 67
- Votes 33
Thanks everyone for the inputs! I have payed back the seller and everything is settled now!
Post: Should I give seller a property tax refund after closing?
- Posts 67
- Votes 33
Thanks everyone for detailed response!! To be fair, the seller's agent did cc my agent in his email and he did attached a detailed calculation in excel spreadsheet. This particular piece of property is located in an area with high % increase of annual pp tax. So the seller assumed the same % increase for this year and overpaid in closing. When the tax bill came in this month, about one month after closing, the amount was a few hundred bucks lower than estimated, thus the refund request.
The seller took the total annual amount, let's say $3650 for simplicity, and divided by 365 days which yields to $10 per day. Then he multiplied by the calender days until sale, let's say 300 days. $10 x 300 = $3,000.
I think the math makes sense. What do you guys think?
Post: Should I give seller a property tax refund after closing?
- Posts 67
- Votes 33
I just closed on a SFH purchase last month in TX and I received an email from the seller's agent requesting a refund from me because the seller over estimated the property tax and has over paid during closing.
Has anyone else been in the same situation before and how did you deal with it? Does the refund need to go through escrow or can be direct?
-Jack
Post: What's your re-financing interest rate?
- Posts 67
- Votes 33
Hi everyone,
I'm shopping around for re-financing rates for my investment property in CA that I purchased in 2016. I have significant equity in the property >50% and good credit score 750+. I'm wondering if you can share your recent re-financing rates with me for reference.
Since this will be my first time doing re-fin, any tips or learnings on what to watch out for during the process will be much appreciated as well. Thanks!
Post: I have access to $500k cash, should I put $50k down on 10 SFRs?
- Posts 67
- Votes 33
I am on the same boat trying to deicide leveraging if going all cash is the right thing to do in my market.
I ready somewhere that there is a limit (up to 4) bank backed mortgage you can carry at the same time. If that's true, how is 10 concurrent mortgages even possible?
~$3200 monthly income on a $500K property doesn't sound like a cash flowing deal when you start to factoring vacancies and management cost like other BP members have pointed out. Why not look into MF properties to look into much stronger cash flow? You only have to finance once, manage one property...
I'm in an extremely hot market as well and people are jumping on top of each other to get a decent deal. All cash offer is MUCH stronger by removing contingency risks and much shortening the closing period.
Be careful NOT to over leverage! Certainly, borrowing money seems to be very cheap right now which favors the investors. If you plan to go with the leveraging route, remember to set a great chunk of money aside, let's say enough to cover 3 months of expenses if 50% of your properties goes vacant. When the market turns on you, you will have very little options but to keep injecting blood (cash) on your own. Can't re-fin, can't short sale, can't fill units... Watch your back!
-Jack
Post: Agent recommendation needed in Austin-Roundrock, TX
- Posts 67
- Votes 33
Hey guys, I'm looking for agent recommendations for SFR who are well connected in the local network and willing to work with out of state investors (I live in California) in Austin-Roundrock, TX area. Since I don't have my physical presents in TX, I would rely my agent on finding great deals, landers and contractors.
Has anyone worked with great agents in the area? If you know someone, please let me know! Thanks!
Cheers,
-Jack
Originally posted by @Darius Ogloza:
Jack: one can only generalize so far from one's own experience as its anecdotal evidence at best. However, I have lived and invested in the Bay Area since 1997, through the dot-com bubble in 2000 and through the Great Recession of 2006-07. Buying on those "dips" was the smartest thing I have ever done. My efforts to branch out into tertiary markets that seemed "undervalued" (I went in for about a million of investment in upstate New York between 2003-2014) produced relatively little of value. I still own a nice property out there for which I paid $180K in 2005. I have put about $35K in improvements. I will get about $220K for it now, almost twenty years later, despite the fact that the house comes with a good development opportunity (3 acres of land). I am breaking even on the rent I am getting from my tenants there. My first rancher in Mill Valley bought for $445K in 1997 will sell for $1.4M in a New York minute. $1.6-$1.7M if we put some effort into gussying it up for sale. It generates about $40,000/year in income between cash and principal pay down. What inferences do you draw from these kinds of numbers? Looking at the demographic data, I see this not as an accident but as a trend. Of course,I have no crystal ball.
Hi Darius,
Everyone is saying "you make money when you buy" and I 100% agree with that! If I go into a deal with positive equity from day 1 (buying under market value), I would probably make money despite market trends. When you bought your property in NY for $180K back in 05', did you pay at market value or below?
What I was hopping buying at a dip was able to more easily get great deals with positive equity from day 1. Of course, if you know what you are doing and have kickass connections, you can find awesome deals everyday despite what market cycle you are in. Did I get that right?
-Jack
Originally posted by @Account Closed:
Originally posted by @Jack Zhuang:
I read reports and experts saying the real estate market are approaching market peak in sales price in 2019. Price growth in my local market in SF Bay Area has defiantly slowed in 2019 Q1 compare to 2018 Q1. It seems like most experts are agreed the price will come down in the near future but they can't agree on how "near" is near.
I've been looking forward to invest in small MF units near the Bay Area but I'm hesitate to buy at the market peak. What should I do? Need advice!
Jack,
Bay Area Real estate is a competitive sport. The best players win. I didn’t realize owning real estate in the Bay Area is sexy until I’ve owned 10 apartment buildings with my partner. 😂😂😂
Let me give it straight to you. The people who say Bay Area Real Estate is expensive, no cash flow, blah blah blah, don’t have the know how to play in this league, or they have some 💩 to sell to you. Our market is one of the MOST lucrative real estate markets in the world. Millions and billions are made here, and people want to take their money to go and play elsewhere? I guess you and they haven’t had the opportunity to meet and talk to millionaires and billionaires who made their money HERE.
Once you’re a player in our market, you can get deals regardless of where we are in the cycle of the housing cycle. Then you will realize time in the market is as important as timing the market.
My partner and I bought 22 units last year in San Jose. We’re negotiating to buy 17 more units for $3.5M now. Then another lead just came in for over 20-unit portfolio in our market while I’m sitting on the balcony at Hyatt Regency hotel in Waikiki watching the waves.
By the way, a buddy of mine just got in contract for a 6-unit bldg in SF for $1.65M. He thought the market has peaked since 2013 while he was watching my partner and I buying bldg after bldg since. He finally realized waiting comes at a cost. He got a decent deal though while others said no deals to be had...😜
Go figure it out and make it happen. Life waits for no one.
Aloha!
Hi Mihn, I greatly appreciate someone who has so much experience in the Bay Area real state market giving new the new prospective. I certainly have not met a lot of investor (millionaires or not) in the area, but I would be really interested to meet people and learn their perspective.
I went for a jog in my neighborhood in Mountain View this evening and saw new constructions of A class-A MF building just wrapping up. Across the street from it, there are blocks and blocks of class-C buildings which were built in the 60s and 70s. As a millennial tech worker myself, I wish there are more available class-A housings to choose from than living in older yet expensive apts. I believe there's still huge potential modernizing the apartments in the Bay Area and more millionaires and billionaires will be created from real estate along the way.
If now is your first time stepping into the Bay Area real estate markets, what would you do differently? How would you start as a newbie with not much connections and limited capital?
Cheers,
-Jack