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All Forum Posts by: Nathan Frost

Nathan Frost has started 106 posts and replied 336 times.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Henry Clark:

Your byline says Wichita Falls but your topic line at the bottom says Lubbock.  Where are your investments?  I love Lubbock Longterm.  Don’t like Wichita Falls.  But each will work with different strategies. 

You might try different strategies:  Don't answer.

1. You have equity in your house. Sell it as a primary 2/5 years no taxes. Move into one of your other units you can get the most value from an ADU or BRRR then 2/5 it. Depends on your family situation. Job and

Home location do they need to be close?  Etc.

2.  Your in Texas, use that to your advantage..    
 
3.  If in Wichita Falls start a trailer park.  Rent the lots and not the homes.  No zoning in Texas counties.     

4.  Texas property tax sales. Buy the unlisted properties.  Pick nasty or strategic and flip.   Land only and not houses.  This is to get more cash around you.

5.  Map out your end game or expectations. See which path will get you there and the resources needed.  


 Their all in the Wichita Falls area.  So just rent steady and not much appreciation.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Jeff S.:

@Nathan Frost  Hardest part is they are all tenant occupied.

Now they are all occupied just sit back and relax a little. You can accumulate some cash just be patient and stop spending and buying. When one becomes vacant analyze it and see if rehabbing it would make you a profit to sell or maybe selling as is to get out from under if it is a loser overall.

This is a good point.  I think its just the mental aspect.  I think I could ride it for 1-2 years and see how it goes.  Analyze as each month.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Michael S.:

@Nathan Frost - there is a lot of solid advice already on this thread.  

I would definitely not buy additional houses right now when the properties you own are already giving you sleepless nights. 

Of your properties, are any of them in A or B neighborhoods that at least break even after property manager expenses, insurance, property taxes, and capex?  Those are the properties you should definitely keep when you decide on properties to sell.  A and B will typically have more potential for appreciation and solid renters.  Obviously, if you own anything in an upcoming area or transitional area, best to keep those as well so long as they are even or better.  Good luck.   

All of them are rented.  Its just out of the ten eight are in a portfolio loan and practically break even with the portfolio loan.  The loan covers taxes and insurance.  Thing is, once one goes vacant or a repair is needed I pay out of pocket a little bit.  Most of the repairs I did in the last two years so hopefully it should be minimal moving forward, but things still come up.  I can literally get through 6-8 months currently I just don't think it is long term sustainable (I understand this).  See below.  Which should I sell?  I am more so trying to figure out, with the help of others, how to fix the issue.  I think selling 3-4 is a starting place then ride with the very good ones.  Its just trying to find a way to cover the release price.  The realtors will say the appraisal value is not attainable since tenant occupied.  Green are keepers.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @JD Martin:
Quote from @Nathan Frost:
Quote from @JD Martin:

Without knowing what kind of portfolio you have it's difficult to give any good advice. 

It sounds like you need either higher rents or lower costs. Aside from ditching the property manager, and evaluating your rents to be sure they are set at market rates, you can either build larger reserves (say from your day job) or pay down notes on the properties not in the portfolio loan. 

If you have $2k cash flow every month, and a job that pays all your bills, you should be socking all that money away into reserves until you are comfortable with your reserve levels. 


 Agree.  Probably won't ditch the property manager due to day job.  Just wonder if holding reserves is smart or to buy 1-2 more to offset the low cash flow.  Tempted to sell 2-3 to be good not sure.

 *Do not* buy more properties in an attempt to minimize cash flow issues. You will only be digging a bigger hole. In general, your acquisition of properties should never outrun your ability to put aside or access comfortable reserves to maintain those properties. If you follow any of the troubles syndications are having right now, that is a primary problem they're running into - their reserves and cash on hand are insufficient to both repair/maintain the existing properties and maintain required reserves for their debt financing. 

Selling good performers is also usually a losing strategy. Don't try to prop up poor performers by divesting good performers. If anything, you should be doing the opposite. 

Your first step is to really nail down why your portfolio homes are performing poorly. If their only problem is too much leverage (unlikely unless your lender let you borrow greater than 80% LTV), then you can probably fix that with what's on hand. If that's not the only problem, then your strategy should be to stabilize or sell the propert(ies) that are causing problems. This may require discussing breaking up the portfolio loan with your lender such that you can sell those parts dragging you down. This shouldn't be as complicated as it sounds as every home is going to have a separate lien filed against it for a specified amount of money.

EDIT: After reading all your other posts, a couple of other thoughts:

1. Don't do the HELOC. You don't have a portfolio that warrants adding more debt especially on your primary.

2. A couple of your portfolio homes look like they're upside down. No idea what they rent for but those would be good candidates to divest if you can cover the release. 

3. If you don't expect any appreciation or rent growth over the next 5 years then you have homes in some rough areas and should consider selling all of those homes. 

This is pretty accurate.  I am not doing the HELOC and can't.  What about an All In On?

I dont think their upside down its just I did this portfolio to pay off debt when I probably should of just sold 2-3 and never did the portfolio loan.

I think I could sell 3 or 4 and cover the release price.  My thought is see what updates I can do to drive the ARV high on them and sell them.  Hardest part is they are all tenant occupied.

Post: Explain Release Price to me

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Chris Seveney:

@Nathan Frost

You will need to talk to the lender and see if the release price on the other loans still covers the balance.

End of day lender wants to make sure they are not left holding the bag when you get down to the final assets

Im still trying to understand.  If I sell above release price do I get that cash?

What if I pay 10 years of equity down

Post: Explain Release Price to me

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76

How does release price work?  I have a portfolio loan and am paying it down but need to sell a few properties.

What if the home sells less than the release price but I have paid a lot of equity into the portfolio loan?

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Carlos Ptriawan:
Quote from @Nathan Frost:
Quote from @Carlos Ptriawan:
Quote from @Nathan Frost:
Quote from @Bjorn Ahlblad:

I don't like selling properties unless it creates an opportunity for something a lot better. It takes effort and money to turn a property into a money maker and that can get lost when you sell to say nothing of taxes etc. Use them as an asset to borrow against instead and if you can.

Don't leverage to the point where you can be forced to sell in a temporary or longer downturn. That is how investors get ruined, happens in all walks of REI investing.

Quit talking to and comparing yourself to your friends. Count your own money and forget about theirs. 

We always want more, bigger, longer etc.

Congrats on what you have achieved! All the best!


 I agree with all this.  Would it best to try and ride it out and see how it goes?  Or sell a few?  Or expand to offset low cash flow?


 Create structured business calculation in term of DSRC and calculate the market asset valuation vs your equity and do what if strategy.

What happen if you sell the most performing asset and what happen if you sell the baddie ..usually the worst performing would stabilize your portfolio.


 I'll say this.  My worst one could net me 20-25k.  And that could give me a nest egg for 6-7 months as if none were rented out.  So that could be my first move and then just go from there.


 Then sell … 

Over leveraging is dangerous path for REI


 I am selling but agree. I refinanced to pay off a big chunk of debt/repairs.  Now I cash flow but thats with all them rented.  If 2 vacant I am out of pocket on my end.  I am not sure the rule of thumb but I think you need 8k in reserves per property?  So for 10 I'd need 80k?  I'd be at 40k.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Carlos Ptriawan:
Quote from @Nathan Frost:
Quote from @Bjorn Ahlblad:

I don't like selling properties unless it creates an opportunity for something a lot better. It takes effort and money to turn a property into a money maker and that can get lost when you sell to say nothing of taxes etc. Use them as an asset to borrow against instead and if you can.

Don't leverage to the point where you can be forced to sell in a temporary or longer downturn. That is how investors get ruined, happens in all walks of REI investing.

Quit talking to and comparing yourself to your friends. Count your own money and forget about theirs. 

We always want more, bigger, longer etc.

Congrats on what you have achieved! All the best!


 I agree with all this.  Would it best to try and ride it out and see how it goes?  Or sell a few?  Or expand to offset low cash flow?


 Create structured business calculation in term of DSRC and calculate the market asset valuation vs your equity and do what if strategy.

What happen if you sell the most performing asset and what happen if you sell the baddie ..usually the worst performing would stabilize your portfolio.


 I'll say this.  My worst one could net me 20-25k.  And that could give me a nest egg for 6-7 months as if none were rented out.  So that could be my first move and then just go from there.

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76

Here is the issue below.  Curious on which I should sell or keep till release price goes down.  Or best action steps.

1206 Bishop $82k / Release Price $79,8001710 Collins $89k / Release Price $78,9601215 Bishop $89k / Release Price $79,8001217 Bishop $99k / Release Price $131, 8802409 Pennsylvania $99k / Release Price $100,800604 E 1 st. $85k / Payoff $45,000

image.png

Post: Overleveraged Advice Please Help

Nathan FrostPosted
  • Rental Property Investor
  • Wichita Falls, TX
  • Posts 338
  • Votes 76
Quote from @Nicholas L.:

@Nathan Frost

Thanks for sharing and sorry this is stressing you out.  As others have said, I can't tell how much variation there is within your portfolio.  Is every single one identical in terms of repairs and capex, and they all net exactly $200 a month?  That can't be the case.  Only you can decide what is right for you but it does sound like you should at least consider selling the worst performer.

In the process of doing that currently.  Really 2.  Should give me 30-40k.  In the past I would take that cash and go buy another LTR.  I think now I should just sit on that cash and save it as a nest egg till the portfolio can match it?