All Forum Posts by: Luis Pena

Hello BP Pros, need your help trying to figure out what my refinance options are for a property I bought 9 months ago with my VA loan. It is a 4-plex in Las Vegas, NV, and I currently live in one unit and rehabbed and raised rents in all units.

Purchase Price was $352,500, and I put $14,750 down payment with a VA loan. After closing costs, my current loan on the property is $336,800 with 4.75% int rate. I've invested about 25k to rehab the property and all rents have now gone up from $600 to $850 on each unit, and I'm currently living in one. Would cashflow about $1K after I move out and rent out my live-in unit.

My question is, can I use the refinance part of BRRRR strategy to get cash out of this property now that rents are raised and property is improved. I would love if I could free up my VA loan eligibility again and refinance as something else, but not sure if that's possible or if it would mean having to pay PMI.

I've contacted a mortgage broker and she said that that appraisers are selected at random to refinance so doesn't matter if I get it appraisal on my own to see current value. She also said that appraisers tend to just look at comps in the area for value and don't look to much into improvements or rents for properties of 4-units or less. At a 80/20 ratio of equity the property would have to appraise for approx $405K, but thought VA loans could be cash-out at 100% LTV.

Is this valid, should I keep searching different brokers or will they all tell me the same thing? Anyone know any options I might have to free up that equity I invested or is this just gonna have to be a buy and hold since I don't have much equity in the property?

@Spencer Cornelia 

Rehab was approximately $25K. I finally got the last unit above me rehabbed so now all units are repainted, have updated kitchens and baths and with repainted stucco exterior, added exterior sliding doors to back yard, new built wall to my neighbor along with patio and shed to separate 2 ground floor units. 

My unit once I leave for Florida will probably rent for $900, I'm sure higher if I leave it furnished. It has one unit is rented as section 8 at $800 and other 2 units are renting at $850. Rental income is currently $2500 with year long contracts on tenants. Expense include $200 property management and utilities at $158. Cashflow is $119 with me living in the nicest unit, so should go up $947 once I move out. All great tenants but will say lesson learned with section 8 tenant is that the process for the government to start paying rent took about 2 months so cashflow was low those months with only tenant paying her small $200 portion but then I was reimbursed the full past due amount from the HUD last month, and now rental income is regular at $800.

Going to hold for now, but might get it re-appraised once I move and have all rents up and see if the new appraisal would allow me to refinance with cash out and free up my VA loan again.

The property is managed by Berkshire Hathaway Home Services and Kasco property management. I'd greatly recommend Celine with that company,  she helped us almost evict bad tenants several times when I bought the property with bad apple tenants and eventually now we have great quality people with long contracts in all units.

@Bill Brandt Thanks for sure we will rent initially while we look for a place to settle, but my fiance's family mainly father is very sick in South Florida so who knows if its a permanent thing or not. We plan to set up a dental business there so it might be for a long haul. I've listened to some webinars on entrust.com,  Neal Bawa, CEO and Founder of Grocapitus and CEO of MultifamilyU says that quite a few Florida cities are great for multi-families. But I might end up with a AF Reserve or Guard Job here in Vegas part-time so investing more here isn't a bad idea either. Feel like Vegas is a great market. 

This one was near the N Airport, Cheyenne/95. The immediate streets it on are actually pretty rough neighborhood but everywhere else around these two streets is pretty nice. Really only half of them seem rundown. Maybe some smart developer will come and rehab all these multi-families on this road, get better tenants and offer a good prices to the current owners. 

Thanks Phillip! I might possibly start looking into another investment property here in Vegas, but planning on moving to FL around September time frame so I'm still up in the air about adding more on my plate. I am transitioning out of the active duty AF into the reserves or guard and a flying contractor day job. Vision is to eventually go down the entrepreneurship path open up dental business with my lady and eventually scale that into commercial real estate all while growing our residential real estate portfolio until one day we get financial free then can focus on giving back to the community after that.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Las Vegas.

Purchase price: $352,500
Cash invested: $20,000

4-plex: 4x2bd/2ba 6,969 sqft. Currently living in a unit so net 0 cash flow is zero but not paying for the mortgage.

What made you interested in investing in this type of deal?

To reduce my mortgage expense and the cash flow from a 4-plex are more then investing in Single Family.

How did you find this deal and how did you negotiate it?

Found it through Zillow/Real Estate Agent. On the market for $360K and each unit was renting out at $600. Now all units and property rehabbed and rent out for 800-850. Used a VA loan and moved in and switched units while rehabbing primary live in unit.

How did you finance this deal?

VA loan after selling my primary home to Open Door for a decent profit after a recent real estate bump.

How did you add value to the deal?

Repainted all units, updated paint on exterior patches, built a brickwall with neighbor. Updated some of the units kitchens cabinets, replaced with granite counters and appliances, added a backyard and window to sliding door conversion on primary unit.

What was the outcome?

Able to raise rents 200 to 250 per unit.

Lessons learned? Challenges?

VA inspection caused certain delays especially since sellers weren't able to come up with a roof repair receipt. Open Door is a great way to guarentee you can sell your property to free up a VA loan eligibility.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jody Lenzie my real estate agent also does property investments and was really good. I also used a contractor name Jimmy Mendez that I would recommend.