All Forum Posts by: Max Ferguson

Sounds like a great deal with being able to change the rate to lock in. I would say if you find the perfect property then go for it. The property has to at least make the mortgage and service the Heloc but that shouldn't be too big of a problem. Getting creative with Short term or Medium term could up your cashflow depending on area. I would reach out to the best investment Realtor in the area and see what kind of numbers a property could produce using the HELOC you have as a down payment. Put it into an excel spreadsheet and see if it works. If it does, pull the trigger, if not, wait a little bit longer.

There are always good deals and bad deals in every market. You cannot time it. In general, the best time to buy is today with proper due diligence. Let us know what you figure out! Good luck!

The real questions is what you plan to do with the profits made from that property? Getting taxed on your capital gains will be really rough, so 1031 hopefully? A full 850k, if paid off, could get you into a great multifamily if you want to expand the portfolio and pay no taxes. 

Let us know your goals/expenses/whatever and we can give a little more insight. Thanks!

Quote from @Charles Carillo:

@Laramie Allen

Of course, paying off your mortgage would be the safest decision but, another option not mentioned above would be to invest the money in the market (index funds), and then take out a margin loan against these funds in order to build the homes. This is a more advanced strategy but, it allows your money to work for you in the market while getting a tax-free (floating rate) loan against the index funds. Your credit is not touched, and in most brokers, you can borrow up to 50% (not recommended) of the value of the index funds. DM me if you are interested in this, and I will let you know what broker I use.

Fantastic out of the box thinking @Charles Carillo 

Can you give some more details of the ARM? Refi or paying it off was my first thought, but if there are parameters that make it worth keeping, I would look into that. Tons of different options, talking to a financial planner in your area or a real Estate investor specialist would be a great idea. Without knowing the rate of the ARM and what it could do, most people here can only guess as to your best option.
Good luck and let us know how it goes!

Hey there, Previous acquisition analyst for a large complex apartment holding firm. We actually didn't have to learn any software other than excel to run our numbers. Each deal is different but we had a master excel sheet we put them through. I learned a lot from the position for sure, good idea to make the change. You already have experience with T-12's, rent rolls, etc.. which is awesome, but requirements for my previous job were a degree in Business, Real estate, finance, accounting, or other related ones. I am not sure what the job you are looking for will require but I would think most are looking for the 4 year bachelor at least for that position. Good luck and please reach out with any questions!

How long have you owned the property? Sounds like you may be able to barely cover the mortgage for a year if you moved out, after that you will be cash flowing. I would try to keep the property if possible and wait for cash flow. Roommates are another great idea for now as well. 

If you have a large amount of equity you could pull that out for another property that has better numbers. Holding at this point would be best for you if you can do it. Let us know what you decide and good luck!

I am currently dealing with a lot of points in your post! FHA was "weaker" so to speak for a while when the market was at it's hottest. It has a more stringent appraisal which would cause the sellers to often go with a conventional if all other points are the same. Now that the market has slowed FHA's are becoming far more frequent. In Colorado we are able to check separate boxes on our offer for loans, my current buyers are in the same situation as you are. I checked FHA or Conventional on the loans section so the seller has to accept either when signing the contract.

List agents understand you are going to go with the loan that is best suited for you and keeps the most in your pocket. Unless the property needs a huge Renovation, you should be all good to go with FHA. Good luck and let us know what you end up doing!

Quote from @Doug Smith:

Quote from @Nick Winikoff:

@Doug Smith

Thank you very much, I guess it would be wise to get pre approval from the servicer before trying to find a buyer?

 ...or at least ask them for the appropriate forms and process before you advertise the loan to be assumable. With only a 1.87% rate and it being assumable, you might even get people to pay more. Think about it, if commercial rates are in the mid 7%.s now, you're probably saving them between 5% and 6% each year in financing costs if they go with your loan. That's massive! Don't underestimate that value to the buyer. I would want to get something for that if I was a seller. 

 Piggy Backing off of Doug's reply, you are saving an investor a serious amount of money. I would be drooling at this deal in Colorado Springs. I think you could get more for list price if the buyer went the assumable route. Last I heard assumptions take roughly 90 days, that could be incorrect though. 

I think your next step is to find a fantastic investment focused agent and see if they can bring you a buyer. It may be too messy to get the deal on the MLS and take a while. If you can start with a buyer and move on from there, everyone in the deal could have a win-win scenario. I have many buyers that would kill for this opportunity. Let us know how it goes, and good luck!

The sink is hard to tell from photos. A true puncture definitely calls for a new sink unless you can somehow repair that flange. Everything else is very miniscule and I wouldn't personally charge for it. If they have been good tenants otherwise I may just write off the sink as well and give them back full deposit. Let us know what you choose. 

Quote from @Jonathan R McLaughlin:

I don’t know, sounds like you will be paying the equivalent of $300 a month in rent at almost 100% financing. Sounds like a good deal to me for your situation. Make sure you include reserves and maintenance costs. If u have already and it’s in a good location sounds great, with some upside to refinance when the tenants pay down the note sufficiently.

Sounds like you are paying less than it would cost you to rent the place. Great place to be. 

I was going to approach my comment in the same way. Don't forget the opportunity cost involved, while yes it will be some extra work to manage and fix repairs, how much would rent cost for an equivalent unit in that town for you to live in? You will also most likely see appreciation on the back end as well, and you are building equity. While the number may not work too well monthly, a deal like this could be a gold mine in 2 years if played correctly. 

Also going into the vein of creativity, if there are any other ways to pull out cash flow from the property such as: switching to short term, having a roommate in your unit, renting out rv storage/extra space, renting out sheds, washer and dryer if not in unit, etc...

For my Duplex that I am "househacking", I pay about 500 a month in expenses currently. One roommate living in our unit in basement and tenants on other side. Extremely high appreciation for my neighborhood so I know selling may be a viable option in two years. When I move out, cashflow will be roughly $1k over the mortgage which is fantastic. This deal wasn't a "how can I make cashflow?"...it was more of a "why would I rent a similar unit for $2200 when I could only pay $500 a month, build huge equity, and cashflow after I move out?"

Lots of factors to consider though! Let us know how it goes, good luck!

Assuming it is a duplex, either way fantastic job. A very clean an great cashflowing deal once refi'd or now depending on the terms of your hard money. Congratulations!