All Forum Posts by: Patrick Torres

@Bobby Larsen @Hope Hatton

Always interesting to hear out of state investor impressions on our market. I have lived in Albuquerque now for 3 years, and it is the first place I’ve purchased an investment in. I believe in the future of our market and the potential in our city, but must be honest that the issues you see here in my experience are not typical for other medium sized cities. Many of the city’s problems are interwoven; poverty, homelessness, and drug addiction are likely drivers of the property damage crimes that we experience at significantly higher rates than other comparable cities. A city’s downtown should be a vibrant focal point, but ours is avoided by many residents and businesses because of these issues. The area in the SE part of town between San Mateo and Eubank is one of the highest density areas for multi family properties, but these issues are prevalent there which makes it a particularly challenging sub market. I went to look at a fixer up duplex in this area recently that was on the market for awhile, it was across from a small park which I thought would be a positive. However that park and most others in this area usually have a lot of homeless congregating in them making the properties in the vicinity less desirable. Our leaders know about these issues and are trying to address them, but a long term solution remains illusive still. Construction of a Tiny Home Village for the homeless is expected to be completed this year, 30 units at an estimated cost of $4.3 million is good, but it’s a drop in the bucket. Resolving some of these issues I believe would attract bigger and better employers who would be drawn to the relatively cheap price of real estate and labor. I expect modest appreciation with the properties I have purchased, but am hopeful we could one day see an explosion in growth like Phoenix or Denver.

Can two married couples purchase a property together as tenants in common, or are there restrictions regarding the amount of individuals that can enter into this kind of agreement? Our plan was to purchase the property together, open a bank account together, apply for mortgage together etc. I understand there may be arguments for creating an llc together, but is purchasing the property as described above possible without doing so?

@River Luce The answer to your question may depend on what your specific goal is. If your goal is to cash flow a little every month or break even (using BP principles to analyze), it might be tough to find a turnkey property on our MLS in an area you would want to live that would achieve that goal. If you believe in the future of our market and were more interested in appreciation, there are nice properties in the areas that @Joshua Young mentioned above for sale at this time time.  If you wanted to have it all, you would likely need to look off market for a deal. I am not a realtor so I do not have access to the most recent data, but it does not appear that prices have come down much in our multi family market COVID.  I would be very interested to know if any local realtors are seeing otherwise.

@Ryan Hazelwood Everything you are seeing online is probably overpriced.  Look up articles on BP about sourcing off market properties.  It may feel uncomfortable at first, you may have to find what works for you, but if you want to consistently find potential deals without immense competition it's likely where you should start.  Read Brandon Turner's article about how he purchased a fourplex for one dollar. 

@Spade Dean Schumacher

Welcome! Congratulations on taking the next step. Lots of great local REI meetups to attend if you have never done so once the world goes back to normal, some of them are probably doing online meetings, check Meetup. Best advice I can give you at this time is to be patient! I closed my first property today on a fourplex , it took me about around 6 or 7 months to find. I almost bought 2 or 3 other properties along the way that would have been mistakes because I wanted that first deal so bad. Feel free to send me a message if you want to chat along your journey.

@Andrew Postell

No sir, it is a portfolio loan offered by a regional credit union. I put down 20% for a non owner occupied loan, I am locked into a 3.5%, 30 year amortization with a ballon in 15 years, no PMI. I am all in right now for about 80% of what the appraisal came in at. One of the vacant units needs a face lift and could be redone for around an additional 3% of the AS IS appraisal value. The lender offers the same terms with a cash out refinance at 75% LTV. I don't anticipate I will get a 3.5% again in 6 to 12 months, but numbers still look good at a higher rate.

@Andrew Postell

It’s not an expensive property and I have a good W-2 job, so I don’t foresee any issues qualifying for the refi.

@Andrew Postell

Thanks for your response Andrew. The same lender I took out the initial loan with offers a 75% LTV cash out refinance for 2-4 unit investment properties, there is a 6 month seasoning period.

I am closing on a fourplex next week, this will be my first investment property. I could get away with a few thousand dollars in rehab, but I plan on rehabbing one of the units immediately while it's vacant. I purchased it with a portfolio loan from a traditional lender that required 20% down, unless some major unexpected repair is needed in the next 6 months to a year, I should be able to get a large portion of that down payment back when I refinance. The Dave Ramsey in me is telling me to pay for everything with cash including the down payment and the rehab, the Robert Kiyosaki in me is telling me to use an interest only HELOC that I have to pay for the for the rehab, and maybe even a part of the down payment just to preserve my cash.

Question is, when using cash vs a HELOC in this scenario does it really matter? If another investment comes along, I could just write myself a check for the additional cash I would need for that one right and I wouldn't have to incur unnecessary holding costs in the interim with the HELOC. I can't help but feel like there is something I am missing and want to hear from any experienced investors that may have an opinion on why it would be more advantageous to make a draw and pay it down as opposed to doing the whole thing with cash.

@Courtney Tinnin

I would be surprised if the terms of his REC allowed him to sell the property or a portion of it to another buyer Courtney. He may not be able to do anything with it until the contract term expires. Besides the solutions already mentioned, once the real estate contract came to an end, there would probably be way to work it out with an attorney whereas an agreement between you and he could be drawn up allocating equity in the property equivalent to the amount of units that he wanted to sell. That might not be something you wanted to do however with someone you don’t know very well.