Has your investment strategy changed in today's market?

[Edgar Garnys]

Hey y'all, if you have cash to invest right now, how are you looking at deals? 

Are you trying to negotiate the lowest price possible to ensure that it produces cash flow today? Are you then thinking to refinance in the future when interest rates go down to get cash out, reduce your monthly payment, and increase your monthly cash flow? Or, are you using creative finance strategies to purchase homes in today's environment? I am curious to know how more experienced investors are taking advantage of today's market!

I purchased two triplexes in 2018 when interest rates were low. I was then able to make minor repairs to each property and raise the rents to market rates in order to maximize the cash flows. I am now finding it more challenging to find properties that produce similar results today. Are there any other types of strategies that I should consider? I am trying to stick with buy-and-hold vs STR since I am currently working a W2 job, so I don't have too much time for day-to-day management. I appreciate any suggestions that you may have!

[Jon Puente]

Hey Edgar, 

Seller Finance is probably the most viable option right now to get the best terms on a rental.  If you choose to go the traditinoal route with a bank loan, I would advise keeping your numbers VERY conservative, meaning:

1) Cap Ex, Property Manager, Vacancy, and Repairs at 10% of Gross Rents.

2) I would raise the interest rate .5% to 1% higher than what you could qualify for, just make room for market adjustments.

3) I would be cautious to think that refinancing is a "way out" of a poorly underwritten deal.  It should be considered a bonus.

Great topic of discussion!