All Forum Posts by: Salvatore Lentini

Anyone have experience protecting their property from a creek that overflows in major rainstorms?  Property has several multifamily buildings, one of which sits at lower elevation near a creek.  The parking lot is almost on level with the creek so it doesn't take much for it to overflow into the parking lot and basement of one of the buildings (currently there is a 2 ft berm built up from prior owner.  Looks like if we were to build up the berm higher (or some kind of retaining wall) and over a certain distance to where the property elevates we could avoid this in the future.  Not sure what type of specialist to have assess this?  Engineer?  Looking for expert advice and a quote to see if this is something that would be worthwhile.

@Michael Bruesch - bank will likely want to see where the down money came from.  Can you qualify for the loan on your own?  If the bank knows of the arrangement they will probably want to underwrite it with both of you on the loan.

@Nick Ferguson - I agree with @Marc Rice - lending on STR has not caught up. More and more lenders are doing it as time goes on because it's an increasing reality they can't continue to ignore. I would just make sure you can get the financing on whatever deal you are looking at. A lot of lenders also care about where you live in relation to the property. They're not generally fans if you live out of state and you don't have existing management in place.

@Joe Villeneuve - 100% agree.

@Joe Villeneuve - are you honestly saying that real world scenarios can't affect real estate decisions as long as you plan? As long as you have a plan then whatever it says on your piece of paper is exactly what you can and should do in reality? C'mon. I'm a HUGE believer in plans and even I have to admit that no matter how detailed I make that plan... it's really just a guide...a framework. The hard part about REI is adapting to the curveballs.

There are lots of ways to have success in real estate and the right way isn't necessarily the one that works out best mathematically.  The right way is the way that you, in your unique situation can make work for you and can continue to do for years and year.  Real estate rewards persistence and consistence.  If something you're doing is only 80% effective but it is something you can be 100% successful at, that's better than trying to do something that is 100% effective but you're not able to do.

@Joe Villeneuve - well for 1) the reasons I gave above, there's not all that much more equity to get out of a property once you take into account the additional costs to sell vs refi. 2) And that remaining equity is only not taxed as capital gains if you can successfully 1031 into a new property in the specified time period, and if the property you are selling is ONLY in your name and not shared with a partner or two 3) Being under the gun with a 1031 puts you at a disadvantage from a negotiating standpoint.  I get calls all the time from brokers stating that their client is under a time crunch because they're trying to buy another property with a 1031 but the property they're selling hasn't sold yet.  They give me specific dates.  Does that help the seller?  I've also gotten calls from brokers asking if I'd be interested in selling one of my commercial properties because their client NEEDS to identify a property asap.  

So, again, I'm not arguing the calculations and growth projections but there is always a difference between paper and reality.  Numbers on paper are clean and perfect.  Real life is hairy and imperfect.  That's why I always keep my original projections for a property and then compare them to the actual numbers in the first few years of ownership so I can try to improve on each subsequent acquisition.

@Joe Villeneuve - agreed. Math doesn't lie on paper but doesn't always translate to real world application.

@Joe Villeneuve - it works for me.  I had high interest rates on most of my loans when I started out.  Now I'm refinancing to lower rates, pulling money out to use on acquisitions, lowering my monthly payments and increasing my cashflow (on existing properties in portfolio and by adding new ones).  And because of the lower rate, I'm paying more toward principal each month.  The remaining 25% equity left in the properties is not really 25%.  I'd lose 5-6% in realtor fees, 1% in transfer tax, not to mention the amount I'd have to spend to prep the properties for sale.  I'd really only net maybe 15% more than a cash out refi.  And unless I was able to successfully able to 1031 all of the money from every refi in the designated amount of time, I'd pay capital gains.  Most of the investors I know that have wanted to 1031 end up not doing it for one reason or another.  So for me, cash out refis work really well.  In a perfect world, on paper, a 1031 provides more bang for the buck but I'm more interested in real world applications.

@Joe Villeneuve - no exceptions?

@Ravi S. Have you run the numbers on doing a cash out refi?  Not sure what kind of rents you can get but I try to keep everything I buy.  Whenever I'm thinking of selling something (to generate cash to buy something else) I always make sure to consider a cash out refi instead.  You can get 75% of the equity in the property back out but the great part is, it's all considered a loan.  So not only is that money you pull out not taxed, you get to deduct the interest on that money...and you continue to reap the benefits of cashflow and appreciation.  If you sell, you're taxed on the profits (capital gains) and your asset is gone.  Weighing the pros and cons of both it's very rare that I end up selling a property from my portfolio.