All Forum Posts by: Michael Albaum

leverage the equity he has in the SFR and purchase 1 or 2 larger multifamily properties, maybe even for all cash. The cash flow associated with MF is, dollar for dolla,r typically a better use of the money. Tapping into the equity will obviously hinder the current cash flow, but as long as you replace it with a stronger cash flow, Bob should be able to walk away nicely.

Hey Wesley, send me a pm and I’d be happy to chat some more with you about the area!

Cheers,

Michael

It all depends on what the lender will allow and each one has their own specific requirements/guidelines. 

Hey Brandon, I've been renting for almost my entire investing career (~9 years). Reason being, I live in the bay area of CA where it is super expensive to own a primary residence. While rent isn't all that much cheaper, I don't have to tie up a huge chunk of change as a down payment, and thus have been purchasing property out of state like it's going out of style. If you do the actual math on the true costs of home ownership, it usually* doesn't pan out as a better investment than renting. I put an asteric there because of course, there are scenarios where it makes total sense. You have to run the numbers for yourself and your specific criteria and see what makes the most sense for you. But I can tell you from experience, I'm so glad I didn't purchase a primary residence while I was growing my rental portfolio, it would have been a pretty big slow down for me.  

Talk to a few different lenders in the area...the fees can vary greatly. I've found local (to the property) banks and credit unions to be the best and have the fairest rates. They can also walk you through the exact process you'll need to go through to refi. Best of luck!

Make sure to get a landlord's policy. I also get at least $1M in liability coverage. You should also have it quoted with ordinance & law coverage. I also like to get extended dwelling replacement if possible. This will cover the dwelling in excess of the dwelling limit if for some reason the rebuild is more expensive than the anticipated limit. Have an agent quote you at several different deductibles just to see what the premium does. You should also look at getting an umbrella policy, this is a catch all that is typically some of the cheapest coverage you can buy. You just need to make sure that the umbrella names the property as an additional insured. Best of luck!

  

Cash flowing properties are nearly impossible to come by in SF. Look a bit outside the city or even in Sac. In CA, its still possible to find 1% properties. Also, in SF, I would be super impressed if you found a 2-4 unit property that made your all in payment less than $2,000. You may be able to find a total fixer upper, but it may be difficult to secure financing on it. You could always use hard money to get into it and get it rehabbed, then refi with conventional financing once you have it stabilized. Good luck!

Look EVERYWHERE! Use agents, Zillow, realtor.com, loopnet, friends, family, direct mail, craigslist, facebook marketplace. There are so many place to find properties, you just have to do the work sometimes to find them. Best of luck!

Look to a few different lenders and talk to them about their HELOC products. HELOCs are some of the cheapest money you can get, usually because they are interest only. While the variable rate may seem extreme and scary, we need to fully understand what it actually means. Let's say you can pull out a $100,000 HELOC and rates today are at 5.5% (for the sake of discussion). That means that you'll pay an annual interest of $5,500 over 12 months which comes out to $458.33/mo. Obviously we know that the actual monthly amount due will fluctuate, but many HELOC products have a cap at the top end. Run your numbers on the potential investment with the worst case scenario...if it still makes sense, then the HELOC should seem a lot less scary. Hope this help!

Call local property managers and ask what they would charge. A good PM will have a great pulse on the market. Also ask the agent selling you the property to pull rental comps