All Forum Posts by: Susan Tan

Here’s my potential frugal plan to drastically reduce my housing costs in Bay Area. On Thursday begins Plan A, I’m gonna ask for a raise at my current W2 full-time software engineering job, and plan B, if that raise gets declined, I’ll ask to move my job WFH full-time to OR/WA, and if that fails, I start job searching for a WFH full-time software engineering job & also visit multifamily property in OR/WA. In next 2 years, I’ll watch real estate prices go down in a Great Recession as the world economy collapses & then save up massive cash to scoop great multifamily deals for house hacking & as a real estate investor.

2 questions:
1.What can possibly go wrong? Is this a bullet-proof plan?
2. If you're a realtor or property manager who can find me good multifamily deals for house hacking in Beaverton, Tigard, Hillsboro, Portland eastern suburbs, or in Vancouver, WA, please message me to set up an intro zoom video call. For a personal multifamily residence, I prefer a neighborhood that has public transport connections into Downtown Portland. I plan to visit OR & Vancouver this summer to figure out which neighborhoods to invest in.

Here’s my potential frugal plan to drastically reduce my housing costs in Bay Area. On Thursday begins Plan A, I’m gonna ask for a raise at my current W2 full-time software engineering job, and plan B, if that raise gets declined, I’ll ask to move my job WFH full-time to OR/WA, and if that fails, I start job searching for a WFH full-time software engineering job & also visit multifamily property in OR/WA. In next 2 years, I’ll watch real estate prices go down in a Great Recession as the world economy collapses & then save up massive cash to scoop great multifamily deals for house hacking & as a real estate investor.

2 questions:
1.What can possibly go wrong? Is this a bullet-proof plan?
2. If you're a realtor or property manager who can find me good multifamily deals for house hacking in Beaverton, Tigard, Hillsboro, Portland eastern suburbs, or in Vancouver, WA, please message me to set up an intro zoom video call. For a personal multifamily residence, I prefer a neighborhood that has public transport connections into Downtown Portland. I plan to visit OR & Vancouver this summer to figure out which neighborhoods to invest in.

@Lamont Marable My first property is a turnkey condo in Incline District of Cincinnati. I chose to buy it from the turnkey catalog because it has a high cap rate & was under $70k purchase price, has stable rents in a B/C+ area, and in a quiet isolated plot of land on top of a hill. I plan to save up more cash to find more deals in Cincy & network with more real estate agents in Cincy who may know of off-market deals & can take videos & pics quickly for me when I've identified a potential good deal on realtor.com.

I like to pay off a mortgage as quickly as possible even if the cash flow gets reduced to only $100/month to $120/month, so I thought a 15yr fixed rate loan meets that criteria. If I got a 10yr fixed rate loan, my cash flow would go negative every month and I'll have to pay out of pocket for property taxes, condo insurance, & HOA fees.

@Justin V.:  How do you find a good mortgage broker or how do you know if they're a good mortgage broker? I've never hired one.

As a beginner, I successfully completed my first cash refi on a paid-off 2bed/1bath condo rental property in Cincinnati, OH. In other words, I got a lump sum cash in return for lower yearly cash flow on a rental property because a portion of rent that I get will be used to pay the new monthly mortgage. It’s a 15-year fixed rate cash refi at 4.5% interest rate. I can use the lump sum cash to buy more rental properties or rehab other rental properties in OH. After doing the math and starting this year, my yearly cash flow will decrease from $5,940/year to $1,502/year for every year because that total difference goes to pay off new mortgage, assuming 100% vacancy & the same rent every year.

Process of doing a cash refi: It is the same as getting a conventional mortgage. The bank needs all the past months' bank accounts, brokerage, and all debts to calculate the debt to net worth ratio. The bank required all the documents on the deed, the bank statement transfers that paid for the property, and even a past rental statement from the property manager. I signed many documents online about credit card opening inquiries and verify that my home address is accurate. I had to wait several weeks to get the documents from title company, insurance, and HOA on the paid off condo apartment. The process started in mid-Jan 2020 and finally concluded on April 8, 2020 when I met the notary in-person (with mask & gloves) to sign the large packet of closing documents in the backyard of the rental unit that I live in. The lump sum payment went directly into my business checking account from the title company 3 days after I signed closing docs with notary.

Learnings:

1. Get insurance on the condo apartment before doing cash refi. I forgot to get insurance on the condo when I purchased it from a turnkey company and the bank asked for the insurance policy doc as a required doc. I had to scramble to call State Farm Insurance to get H06 condo insurance in February.
2. This process takes several months: requires quick responses to various loan officers who always want more bank documents. The email threads for this process is over 80 email replies. I wish it could've gone faster but this is how financing works.
3. Budget in time for appraiser to connect with property manager. You'll never get the contact info of appraiser because that goes against bank rules, but you can group email the loan officer to the property manager in a thread to schedule time for appraiser to do an inspection & take photos of occupied property.
4. Certain documents require access to a printer so you need to handsign & scan documents & email them to bank. This was especially a downside while CA has a shelter-in-place order and I had to commute by bus 10 miles away to the empty work office where printer & scanner are located.
5. This cash refinance is possible to do even when I live over 2,000 miles away in CA while the cash refi was done on my property in Cincinnati, OH. Emails, phone calls, and electronic signature make this all possible.

the latter! Did i post in incorrect forum & if yes, what is the most accurate forum to post this in? I don't think this is a success story but more of an experience story.

As a beginner, I successfully completed my first cash refi on a paid-off 2bed/1bath condo rental property in Cincinnati, OH. In other words, I get a lump sum cash in return for lower yearly cash flow on a rental property because a portion of rent that I get will be used to pay the new monthly mortgage. It’s a 15-year fixed rate cash refi at 4.5% interest rate. I can use the lump sum cash to buy more rental properties or rehab other rental properties in OH. After doing the math and starting this year, my yearly cash flow will decrease from $5,940/year to $1,502/year for every year because that total difference goes to pay off new mortgage, assuming 100% vacancy & the same rent every year.

Process of doing a cash refi: It is the same as getting a conventional mortgage. The bank needs all the past months' bank accounts, brokerage, and all debts to calculate the debt to net worth ratio. The bank required all the documents on the deed, the bank statement transfers that paid for the property, and even a past rental statement from the property manager. I signed many documents online about credit card opening inquiries and verify that my home address is accurate. I had to wait several weeks to get the documents from title company, insurance, and HOA on the paid off condo apartment. The process started in mid-Jan 2020 and finally concluded on April 8, 2020 when I met the notary in-person (with mask & gloves) to sign the large packet of closing documents in the backyard of the rental unit that I live in. The lump sum payment went directly into my business checking account from the title company 3 days after I signed closing docs with notary.

Learnings:

1. Get insurance on the condo apartment before doing cash refi. I forgot to get insurance on the condo when I purchased it from a turnkey company and the bank asked for the insurance policy doc as a required doc. I had to scramble to call State Farm Insurance to get H06 condo insurance in February.
2. This process takes several months: requires quick responses to various loan officers who always want more bank documents. The email threads for this process is over 80 email replies. I wish it could've gone faster but this is how financing works.
3. Budget in time for appraiser to connect with property manager. You'll never get the contact info of appraiser because that goes against bank rules, but you can group email the loan officer to the property manager in a thread to schedule time for appraiser to do an inspection & take photos of occupied property.
4. Certain documents require access to a printer so you need to handsign & scan documents & email them to bank. This was especially a downside while CA has a shelter-in-place order and I had to commute by bus 10 miles away to the empty work office where printer & scanner are located.
5. This cash refinance is possible to do even when I live over 2,000 miles away in CA while the cash refi was done on my property in Cincinnati, OH. Emails, phone calls, and electronic signature make this all possible.

I agree that real estate is much more stable & resistance to change compared to stock market. Class A & other luxury areas continue to hold their value over time.

@Jasraj Singh I highly recommend visiting or temporarily living in the area you want to invest in. I also highly recommend the Midwest as a good starting point of your in-person traveling in USA because many properties in Midwest meet the 1% rule: the total monthly rent is at least 1% of total purchase price + total rehab price. Google street view does not tell the whole picture of a neighborhood, so please refer to researching online all the safety maps, population demographics, median income, median sales, and all the info about a neighborhood.

Please read David Greene's book Long distance investing and then come back to this forum for more questions.

"down payment was about $4,800". How did you manage to pay such a low downpayment and is this a VA loan, @Michael Fitts?