All Forum Posts by: Zaid Badabwan
Zaid Badabwan has started 26 posts and replied 47 times.
Post: shopping for best mortgage
- Posts 47
- Votes 9
Thank you for the advice.
Post: shopping for best mortgage
- Posts 47
- Votes 9
Hello Friends
I am shopping for the best mortgage and already applied to two lenders. At the end, I am going to accept the best offer, but would like to know my responsibility toward the the other offer which will be declined. Would I pay anything like appraisal, or closing cost?
Appreciate your advice
Post: What is best strategy during these difficult times?
- Posts 47
- Votes 9
Thank you for your insightful advice.
Post: What is best strategy during these difficult times?
- Posts 47
- Votes 9
Hello everyone
I have been investing in multi-family rentals for few years now, and doing well. However, the inflation, rising interest rate, and expected recession are confusing me about investment strategies and decisions. I have some cash and a good line of credit and I have been hesitant to buy new properties because of the increase in real estate prices in one hand, and because of recent inflation and bad news coming from everywhere!
My concern now is to find best use of my available cash and line of credit. Is real estate still the best choice even with the increase of prices? or may be gold, or stocks for a while until the economy is safe and stable? or may be do nothing and wait?
Please give me your opinion, knowledge, and expertise. I would appreciate your feedback.
Post: Selling part of portfolio to pay mortgage
- Posts 47
- Votes 9
Quote from @Randall Alan:
Quote from @Zaid Badabwan:
Hello
I have bought seven units with 70% loan and now with higher prices, I can pay back my loan if I sell 3 units and this way I will have 4 units totally paid and available for cash refinance if real estate prices fall.
Is this a good strategy? Or should I just keep my mortgage and keep the seven units.
Please advise me with your good insights.
We’ve been doing the same thing. Had 19 loans. We sold a couple of properties (that we liked the least due to neighborhood, turnover, etc) and used the proceeds to pay off other properties. We also did several cash out Refi’s when the rates were low which allowed us to not only lower our rate, but also pay off additional properties with the cash out. We are now down to 9 loans across 24 properties.
Increased our cash flow, lowered our interest rates, and freed up Fannie Mae loan availability for future purchases.
Win-Win-Win!
As for you, I would look at how interest rates play for you. With rates higher now , refi’s probably don’t make sense. On the other hand, having 7 properties allows you more appreciation, depreciation and cash flow. I would look at the net numbers… run the scenario both ways… selling versus holding. The debt is really of little concern as your tenants are paying that for you.
I would look at net cash flow each way. You also have to weigh how much effort it takes to manage them.
As we paid off units we found our net cash flow stayed the same, as the appreciation in the properties allowed us to borrow more and pay down enough higher interest debt that we didn’t lose any income. Plus, with a better interest rate on the new loans, our cash flow also increased as well (less interest expense).
All the best!
Randy
Thank you Alan for the thorough and knowledgeable suggestions. I will follow your recommendations.
Post: Selling part of portfolio to pay mortgage
- Posts 47
- Votes 9
Quote from @Randall Alan:
Quote from @Zaid Badabwan:
Hello
I have bought seven units with 70% loan and now with higher prices, I can pay back my loan if I sell 3 units and this way I will have 4 units totally paid and available for cash refinance if real estate prices fall.
Is this a good strategy? Or should I just keep my mortgage and keep the seven units.
Please advise me with your good insights.
We’ve been doing the same thing. Had 19 loans. We sold a couple of properties (that we liked the least due to neighborhood, turnover, etc) and used the proceeds to pay off other properties. We also did several cash out Refi’s when the rates were low which allowed us to not only lower our rate, but also pay off additional properties with the cash out. We are now down to 9 loans across 24 properties.
Increased our cash flow, lowered our interest rates, and freed up Fannie Mae loan availability for future purchases.
Win-Win-Win!
As for you, I would look at how interest rates play for you. With rates higher now , refi’s probably don’t make sense. On the other hand, having 7 properties allows you more appreciation, depreciation and cash flow. I would look at the net numbers… run the scenario both ways… selling versus holding. The debt is really of little concern as your tenants are paying that for you.
I would look at net cash flow each way. You also have to weigh how much effort it takes to manage them.
As we paid off units we found our net cash flow stayed the same, as the appreciation in the properties allowed us to borrow more and pay down enough higher interest debt that we didn’t lose any income. Plus, with a better interest rate on the new loans, our cash flow also increased as well (less interest expense).
All the best!
Randy
Post: Selling part of portfolio to pay mortgage
- Posts 47
- Votes 9
Hello
I have bought seven units with 70% loan and now with higher prices, I can pay back my loan if I sell 3 units and this way I will have 4 units totally paid and available for cash refinance if real estate prices fall.
Is this a good strategy? Or should I just keep my mortgage and keep the seven units.
Please advise me with your good insights.
Hi Aaron and welcome to the club
I would certainly advise to start locally in your vicinity. Old properties may be more profitable if you are taking care of your business personally. Don't use management for old properties because management companies tend to use contractors for all maintenance which cost a lot more than if you bring a handyman to fix whatever needs to be fixed. In addition, upgrading old properties will appreciate the value of the property. Therefore, old properties in your area is not a reason not to start there. Just make your calculations for rent, renovation, taxes, insurance, utilities, and maintenance to make sure that you are making the right investment.
If you decide to invest away from home, then get very sound property that would need the minimum maintenance.
The last thing I would say is that you should put your money as a downpayment (20-30%) of property cost and get a loan, this way you will be increasing your cash to cash return as well as your long term profit from property appreciation because you will be able to buy more properties when using loans.
Post: Tenant refusing termite treatment
- Posts 47
- Votes 9
Hello landlords and friends
I have bought a quadruplex in Tampa FL and inspection showed termite in the building. I have informed tenants that I will be doing tenting for termite treatment and offered payment for their accommodation during the tenting. One of the tenants, who also has not paid rent for January is refusing to cooperate and leave the unit for 3 days. I thought to serve him an eviction notice since he has not paid January rent, but this will not help because of the eviction ban.
The main issue I need help with now is how to make him accept tenting.
If you have any ideas, please let me know soon.
Thank you
Hello everyone
I have been investing in multi family rentals for few years now. One of my properties is zoned for higher number of units than the existing duplex. I have just started initial plans and would like our experts in BiggerPockets to lead me to the process. Do i sign building contract and the contractor takes care of permits or do I get the permit first and then find a contractor.
I talked to my lender and they want me to get permits first and come back to them.
Your advice and experience will greatly help me with my project and will appreciate any ideas and opinions.