All Forum Posts by: Mark F.

Are you able to appraisal/equity out of PMI like conventional or is it like FHA where it's only if you refi into conventional? I assume you can get enough equity to have it dropped.

Asked on the BP FB group but hoping for a few more opinions here.

Heard this topic talked about on episodes lately but are there resources on selling VS holding with a decent equity positions? Websites or podcast episodes specifically? Refi makes zero sense with current interest rates (mine is at 2.25%). It would kill my cash flow and I wouldn't be able to pull out as near as much equity as if I sell. But I'm looking at $250-$275k in equity I can't fully tap into, minus $40k in closing costs. I'm not looking to go full time in RE as I love my W2, but trading my duplex to a 4-6 unit is a goal of mine as I love managing my rentals. I'm currently not occupying this duplex.

Another pro of selling is its tax free w no 1031 rules due to the 2/5 year rule (waiting on a conferral call with my CPA). This same scenario will play out in another two years with my current house hack (forced and natural equity, low 2% mortgage, $5k gross rents etc). The numbers- property value is confidently appx $700 to $725k per my realtor and comps I've looked at. Purchase price was $492k, $450k mortgage balance @ 2.25% rate. I put 0 down as I used a VA loan. I'm into the house for closing costs and repairs for appx. $50k at most. Cash flows appx $20k per year. Brings in $4500 gross rents, market rents are $5000/month but the units are outdated as the tenants stay when I keep increasing rents. Area is a solid B. It's not a headache property. Area is a solid B and has been on fire recently from what I've been told at multiple RE meet ups. Neighbor across the street went under contract with multiple offers at and over asking, realtor told me $25k over so $825k. That comp does have 600 sq ft more than my place. The market I'm in is a strong appreciating market and actually was listed as the top rent growth per the latest Drunk Real Estate Podcast episode.

Needs about $15k in updating to get $725k or it could go for more the way our market is. If I bought a 4 to 5 unit, it'd be around $1mil give or take. Would bring in around 10k in gross rents per month. Thoughts or resources? Can provide more context if needed. As I'm writing this, it kinda seems like a no-brainier to sell. But don't wanna regret holding on to it years down the road. Thanks BP!

Quote from @Ryan Thomson:

Quote from @Benjamin Sulka:

Quote from @Ryan Thomson:

Good word @Andrew Postell. 

VA Loans do not have PMI

FHA Loans cannot get rid of PMI.

Conventional Loans can get rid of PMI when you have at least 80%LTV.

 Ryan,

So in order to get out of PMI if you began with an FHA loan is to refi into conventional?

Thanks for posting this. I didn't even know that your loan to value could be improved if the value of your home increased. I thought it was entirely based on your purchase price. 

The only way to get rid of PMI for an FHA loan is to get rid of the FHA loan. They are great for only putting 5% down on a duplex. So I would certainly still use them as PMI is not that big of a deal. But no need to pay it if you don't have to.

 There is no 5% down on a duplex anymore unless some local bank/lender is offering that specific product.

Quote from @Ryan Muska:

I learned this the hard way.

After getting my house closed on. The next week I got a letter from Travelers saying that my insurance was being cancelled. Luckily I secured new insurance (at a cheaper rate) immediately after, but that was a very stressful few days...

 Ryan I'm right around the corner from you with a few duplexes and adding one by the end of the year. My insurance broker is awesome and I refer people to him a bunch if you want his info to habe in your rolodex. Shoot me a PM. 

Quote from @Jay Hinrichs:

Quote from @Mark F.:

Just watched the webinar replay. Here's my summary with no opinions. It was about 20 minutes long with the rest of the time, an hour, Jorge answering questions and comments.

out of sheer curiosity what is the Supreme court decision about ?

 https://www.wgbh.org/news/local/2023-05-26/supreme-court-ruling-on-municipal-foreclosures-will-preserve-equity-for-massachusetts-homeowners

Just watched the webinar replay. Here's my summary with no opinions. It was about 20 minutes long with the rest of the time, an hour, Jorge answering questions and comments. I am summarizing all of this and may be missing details.

Extreme cost cutting mode is what Jorge opened up with. They had approximately 50 employees or so employees before all of this, they are down to about 15 employees with plans to go down to 5 employees in the next month.

AHP Servicing is down to 1 mil in debt owed, from 3 mil last month. They anticipate paying it all off by the next webinar. The plan is to pay the debt down (it is due at the end of the year), pay back vendors (I forgot about this on my last post. They owe their vendors money and are on a cash basis for the vendors for work going forward until debts are caught up), then catch up on distributions, then redemptions. Jorge did not give a timeline on when redemptions would start other than he doesn't think they'd be done by the end of the year. He feels very confident distributions would start before the end of the year. They have a few closings coming up they anticipate will pay off the 1 mil debt.

AHP Servicing is entering strategic partnerships with two companies. At a high level, this will let AHP run leaner, taking the entity from running in the red to black. Jorge vision of having AHP Servicing hasn't worked out the way he thought it would. One company will use AHP for all of their licenses. Once the partnership goes through, AHP will not be servicing loans. CMS is one of the companies they are partnering with. Privocorp is the other. Jorge went into details on both o these partnerships.

AHP2015 has no debt in regards to vendors, etc. Still trying to get through some sales to generate cash. Talked about the US Supreme court recent ruiling.

AHP Title is in a partnership with another company, which they bought around 40%. They want to exercise their option to buy a majority stake but have not done so yet.

PreREO is in talks with two companies for a partnership but he thinks will happen in the coming weeks.  

Jorge is putting out a letter in a week or two with specific numbers people are asking about.

Jorge still feels confident they can pay all their obligations and move forward.

Quote from @Chad U.:

It's been a few years since anyone has posted here about their investment.  Curious to here if anyone has recent experiences to share, as I've heard they may be in financial trouble.  

Like someone else mentioned, they've been putting out webinars every month (next one is this Friday) but it's been a rough year for AHP. There's a lot to digest but I'll try and give an overview while missing a bunch of info I'm sure. Don't hold it against me.

They've laid off a large chunk of their staff. I think 30 to 50%? This has helped their balance sheet but obviously they're working harder. Jorge was surprised how lean they could operate (sounds like this should have done sooner).

Like someone mentioned, they're still behind on monthly distribution and redemptions. Distributions have been catching up but redemptions won't resume until all distributions have been caught up. Jorge priority is #1 pay off debt coming due in 2023, #2 catch up all distributions, #3 resume redemption request. They are 2 years behind I believe, depending on the fund.

Speaking of, one of the reasons why they're behind is because of debt coming due later this year. They've been aggressively paying it down and are on track to before the due date. The lender(s) wouldn't negotiate due to the market so this put them in a big crunch.

Business plans with certain arms of AHP haven't worked out. From memory, Skid Row isn't doing good and neither is AHP Servicing (the actual mortgage Servicing company they started, which seems to have dog sheet reviews). They've talked about merging or being bought out by another company (AHP Servicing I believe) and if/when this happens, it'll be a cash infusion.

Lastly, the market (I know most of you know this, I'm just repeating what Jorge said) is not great for them selling the notes on the secondary market to recoup capital. They, in retrospect was a bad idea, did loan mods at 3-5% for borrowers (whyyyyy?????) so now when they are reperforming and want to sell, need to go for much less than what Jorge wants to sell at to reach the yield investors want. Therefor, they aren't selling at that discount and instead just collecting monthly payments. IMO, I think is what hurt them the most. But what do I know? Not much.

I'll say again, I am missing a lot of info or some of it may be slightly inaccurate as I'm going from memory from a webinar a month ago. I'll give an update after Friday's webinar if anyones interested. BP mobile site isn't user friendly either so apologies for the typos.

Maybe I'm optimistic, but I still think I'll get my money back. They seem to be running lean enough and it appears they need to get passed one mahor hurdle, paying off the debt, to start paying out again. I'm definitely investing my money elsewhere though after this, most likely a note purchase.

The biggest risk I see is one decent size hiccup and they could be toast. It's interesting to see comments in the webinar, Jorge addresses all of them. Some are unhappy, most are supportive. I read his book as he sent me a copy. After that, but before all this went down, I asked to be cashed out. I'll leave it at that.  

Quote from @Matthew Masoud:

Quote from @Mark F.:

 That's better but I'd still want a bit more IMO. Yes I manage my own, only 3 units now but going to 5 by the end of the year.  

I was about to go all in on MTR when my LTR tenants left. The more research I did,the more I realized it's still a hospitality business like STR. I served and bartended when I was younger, people suck and are stupid. Like you, I enjoy my job and I'm sticking to LTR management which I thoroughly enjoy. Thanks for the honest feedback.

And $400/door sucks IMO for MTR. If I'm doing all that work, it needs to be higher. I'm just about at that with my LTR.

NJ investor here. My policies have jumped approximately 20% in the last year. To help offset I've raised rents slightly, upped my deductibles and have my insurance broker continously shop around for the best polices. I've also never made a claim nor will I unless it's catastrophic.