All Forum Posts by: Jon A.

@Haley Cisar I'm not a loan officer, and you should talk to a loan officer. But here is my understanding:

1) There are pros and cons to either strategy, cash out or heloc. The benefit of doing a cash out refi on your primary as opposed to an investment property is that you'll get a better rate. The con is that you'll pay interest on that loan every month, regardless of whether or not you're doing a deal.

The benefit of a heloc is you only pay interest when you use it. Downside of a heloc is they're often variable rate, meaning you can be mid-deal and suddenly your carrying costs increase. In my region, at least, there are lenders who pay all costs including appraisal on a heloc.

2) Again, talk to a mortgage officer. But my understanding is that you have two options - delayed financing i.e. immediate cash out refi based on the PURCHASE price, or wait 12 months and cash out based on the APPRAISED value of the property, which would presumably be higher. You can probably find a lender to give you a cash out based on appraised value without the 12 month seasoning period. But you'll pay for the right. You need to make sure the rent can support those higher costs.

Think you need to provide more specifics on the numbers before anyone can give you helpful advice.

@John Peter I can't say definitively wait. But be careful. We could be at the height of the market, or the fed could drop rates in 2023 and the market picks back up. No one knows. So don't buy just to buy; make sure you're buying at a discount and are adding some value to create an equity buffer.

RE condos vs sfh, that's very market specific. In some markets, condos are more desired; in others, they sell at a discount. The HOA fees and taxes usually make it hard to condos to generate a good return unless you're the sponsor/developer. The HOA fees are basically property manager fees but often more than 10% of gross rent...Multi family is usually the way to go, as it's more efficient to have multiple apts with only one roof, one set of systems, etc.

@Joe S. Your post resonated with me. Think I'm in a similar spot. I can't imagine doing 33 extensive renos in 2 yrs, but I've been entirely gutting a small multifamily every year since 2014. Going from one project to the next. I also self manage all properties, finding tenants, doing repairs, etc. In addition to my full-time w-2. It definitely takes a toll on your relationships with friends and family.

I'm dealing with my fatigue in two ways -

1) I'm taking a break. With market conditions being what they are, it seems like the perfect time. I'm still looking at deals but not pulling the trigger unless it's a can't miss deal.

2) I'm doing the necessary research/legwork to adjust my strategy and make my work more passive. Specifically, I'll be pivoting to mixed use condo conversions. Sell the residential units, hold and rent the commercial units since they require less active management. This strategy is specific to NYC, where condos sell for more per sq ft than ordinary houses, but I'm sure there's some strategy that you could employ, whether buying NNN properties or something else.

@Jace Perez This is a question to ask a lawyer, and I'm neither a lawyer nor qualified to give legal advice. Your lease should clearly lay out your agreement with your tenant, but at the end of the day you can't put anything in there that contradicts the law of the land. The eviction process in NY is heavily regulated and there's not much a lease can do about that. The best thing is to screen very very very carefully.

I don't deal in raw land and never even heard of land flipping until this thread. For someone who does this, as opposed to folks selling information, what's the value add that created equity to flip the parcel? Subdivide? Bring in utilities?

@Armando Montrond When you don't have two years of rental history with a property, lenders are supposed to go off the leases and verify with bank statements. Some lenders have overlays that prevent it. You need to keep calling lenders until you find one that will take the rent off the lease. That should be your first question.

Are you planning to buy a new primary? If so, the lender may also use the income on the unit you live in, as long as you sign a lease with a tenant for that space before closing.

@Chris Seveney Where do you see rates going on the next 12 months? I ask bc in the next 12 months the Fed will presumably either solve inflation or cause a recession. Either scenario likely leads to lower rates of some sort, though who knows how low.

Thanks for sharing @John McKee. Is there a tool or website you use for commercial comps when projecting fair market rent? In the residential world, it's fairly easy - go on the rental sites and there are plenty of apartments listed. But when i come across vacant commercial, I have trouble projecting rent and will not take the agent's word for it.

Good question @Mike Dymski. I'm interested in the answer.

 You're right. Which makes me think of @James Hamling's comment.

@Frederick William how did you make this $1M and why don't you just keep doing whatever you did to make that money?