All Forum Posts by: Matthew Enos

@James Denon check with the lender. There may be a cutoff where they don’t require a second title insurance for a refinance. Anytime a lender is willing to roll costs into a loan I would do it. This would help with building/maintaining working capital but your first post said the cost was high. Wether you pay or roll into the loan the cost will still be the cost. What type of entity is the property titled in? You might be able to get a line of credit or abundance of caution on the property. It would give you equity with smaller closing costs

@Kevin White That is a great question. I use Ryan Antonucci and S&T bank for a bulk of my financing. I am opening a second relationship with NexTier bank right now based on recommendations from my closing attorney. I have been successful offering private financing at 6% interest only payments to borrow cash and use as down payments.  I have received owner financing from sellers around the 5% range (but less money down). My cash on cash return is above 50% so i wouldn’t mind paying 6 to 9 % to a private money lender. I stopped thinking of it as “what do i pay” and more of “does the person feel like he is getting a good return on his money”

@James Denon Hi James. I think if you found a lender between 70% to 80% LTV you would be within the norms. The interest are higher so that may be something you have no control over. Your closing costs seem high though. For a property that is not transferring title,, your closing costs should be lower. Appraisal, bank underwriting and origination, and then recording fees. I pay less than 1K when refinancing.

@Charles Douglas @Aubrey P.  I think it may depend on how much equity your have in the entity that the rental is titled in. My understanding is there is a minimum cost to issue a policy. An excess liability may be 800 per year or an umbrella may be a few hundred a year and each property added would be a small adjustment. 

But if you are insuring only a 20K equity position you may not want the extra cost vs having a 100K equity position in which case the cost may not seem as high.  I can recommend Charles Douglas for insurance needs.

@Eugene Rogachevsky I don’t know how he would pay on teh capital gains. I’m assuming if he is cash basis then it would be as cash came to him vs accrual basis. That is an election he makes within his business. I would ensure you know your own criteria with regards to cash on cash, return on investment, and return on equity as good examples.  If you know those numbers then you don,t need to rely on others, they either pass that criteria or they don.t  

Different areas if the country are different. For example, in Pittsburgh pa I get over 50% cash on cash return which would be unheard of in some of the higher priced markets. But I do know my criteria and then I just asssess whether I met it or not

@Eugene Rogachevsky What do you believe the after repair value would be? If you purchase for 205 minus the 5K down and then pricnciple paydown of 21K then the balance would be 179K. When i buy a property with seller financing I protect my interest by getting title in my name. This would trigger transfer taxes and he would more than likely pro-rate the property taxes. This may mean you have to bring more than 5K to closing. Your are also doing 20K in repairs. At the end of 7 years, you would have to make the ballon which means you need to be less than 80% of ARV or bring more cash. Even with seller financing I would not pay more than ARV minus repairs

Why do you believe you can get more rent than what fair market is? Is this continuous or does it have high rent followed by longer vacancy periods?

@Nick Hundertmark talk to a closing attorney. See if you can do this with two closings. First buy the property in closing one with 80% bank and 20% you. Bank is recorded as first position. After the closing have a second closing where the attorney creates a note and mortgage with the seller for 10% of the deal and is filed in second position. You would need 20% for the transaction but get 10% back at second closing.

Does your lease specify weekly or monthly? If he has not paid the rent in accordance with the lease is there a reason you are waiting?

@Judy Lipinski We use Zachary Wright who is a broker. Through him we have policies with Grange, Millers, and Travellers both in personal lines and commercial lines. My understanding is a broker needs to have acesss to the companies so no two brokers are the same because they may not have access to the same companies.

@James Kenney Welcome. Western PA REIA would be a good REIA club. I am around the airport area and if you are looking around this area message me. Thanks