All Forum Posts by: Jaysen Medhurst

@Alex Di Savino, let your company pay the costs to sell, then take the money and roll into a house hack in your new location.

@David Floyd, get the LLCs. Sure there's some expense and paperwork involved, but that's the cost of doing business as a professional. Cheap out here and it can cost you way more down the road.

Remember, LLC protection works both ways. Not only if a tenant goes after you, but if something happens in your personal life (you're at fault in a car accident), your assets are protected.

@Happy Sohi, if you have the cash for purchase, reno, and contingency, I say go that route. That puts you in a great position when purchasing (as you eluded to).

You will pay "closing costs" twice, but not really. You won't have to get an appraisal when buying cash and any costs associated to the mortgage are only when you get the loan.

I recommend you do the lender legwork now, though. Talk to several local/regional banks/credit unions. Find out what there terms are, not just rates, but seasoning requirements, etc. Best case scenario, you refi all teed up at closing, then pull the trigger when it's time.

@Account Closed, that would constitute mortgage fraud and is a terrible idea.

@Josh Bast, it's not that your strategy is "bad," it's that it won't produce the best financial results over the long term. Every year that you put money towards paying down debt on existing properties instead of buying more is a year those additional properties aren't making you money through CF, depreciation, mortgage paydown, or appreciation. Consider this example:

$100k house rents for $1k/month; 2% appreciation/year

A: Buy the house outright: CF $500/month (50% to expenses). Value after 1 yr = $102k; Return on Equity (ROE) = 8% ($6k CF, $2k appreciation)

B: Buy 5 properties using 20% down and debt (30yr, 4.25%) on each: CF of $530/ month ($106/unit/month after debt service). Value after 1 yr = $510k; ROE = 16.4% ($6360 CF, $10k appreciation)

Extrapolate that over 10, 15, 30 years. Putting CF aside, at the end of 15 years the value of A will be ~$135k, a ~35% return on the $100k, but B will be worth ~$675k, ~175% return on your $100k.

This doesn't even factor in depreciation or mortgage pay down.

Let us know if you have more questions.

@Cassidy Burns, I don't offer last and final immediately. I just don't see negotiations as a zero-sum game.

@Tony Maro, you need to know what you're getting into before you jump into any of these. Have you reached out to the auction house or owner for current financials? He may not be willing to provide for the SFH as their value is based on comps. But the multi-family is a different story. You have to know the NOI to determine it's value.

No matter what you find out, go to the auction. It will be worth the experience.

@Josh Bast, everyone has to determine their own investment strategy based on their situation. That said, you can come at your goal a couple of different ways. What is your monthly CF goal?

Getting more income-producing properties faster is going to (in most cases) get you there faster. There's a big opportunity cost to paying down existing properties instead of purchasing additional ones. 

Reply with some numbers like average rents, monthly CF, etc. and the community will be happy to help you with a strategy that hits your goals.

@Mike Wheeler, few things here:

1. You're unlikely to get an investment loan with only 10% down. Most require at least 20-25%.
2. Your Vacancy is pretty low at 2%. I figure 10% to be conservative.
3. Management is usually around 10%.
4. Why are you estimating $70k ARV, but a purchase price of $45k and barely any repairs needed? Why wouldn't this sell at a price closer to market value?
5. With less than $30/month CF, you're setting yourself up for big trouble. Any bump in HOA or a special assessment and you're sunk.

I don't see how this is a winner. Why are you pursuing it?

@Harvey Fang, Main problem is that you have a 0% interest rate on your refinance loan. Please PM me with that bank and the loan officer's favorite brand of Scotch.

With a 4.25% rate your P&I is going to be $807/ month, bringing your monthly expenses to $1638 and your cashflow to $62/month.

Based on these numbers this is not a good deal.