Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y
@Juan Rubio If the property is multifamily submetering utilities can be a great way to reduce expenses, also the less you put down the higher your cash on cash and the more you put down the less that will be.
@Dave Smith it is going to depend on the terms of your HELOC, most don't make you pay on a monthly basis with a amortizing loan balance. The cash flow is lower because the property is low priced, there really isn't a way to fix that, especially because most rental properties are valued based on a percentage return and not a fixed dollar value return.
Indianapolis, IN · Member since 2015 · 125 posts · 50 votes
8y
You could leverage or refinance the property and reduce your cash in the deal or raise rents. Ideally, fix it up and get higher rents then refinance to get your cash out. Play with the numbers at different finance levels. Leverage is a risk-reward type of relationship. The more leverage, the higher the risk, and the higher the return. Lower leverage, lower risk, lower return.
Olathe, KS · Member since 2018 · 31 posts · 3 votes
8y
I am analyzing a deal with the opposite. The CoC return is strong, but the cash flow is weak because it's a 1/1, where comp rents will only allow for approx. $500/mo ARV. I am using a HELOC, and the cost of the money reduces cash flow as well. I am also concerned with an ARV of $31,000, I won't be able to get a refi to pull out my cash, because of the low loan amount. Am I missing something?
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y
@Juan Rubio If the property is multifamily submetering utilities can be a great way to reduce expenses, also the less you put down the higher your cash on cash and the more you put down the less that will be.
@Dave Smith it is going to depend on the terms of your HELOC, most don't make you pay on a monthly basis with a amortizing loan balance. The cash flow is lower because the property is low priced, there really isn't a way to fix that, especially because most rental properties are valued based on a percentage return and not a fixed dollar value return.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
8y
@Dave Smith yes it is difficult to get loans for amounts that low, partially because it takes the same amount of labor to process a $50,000 loan as it does a $500,000 loan for much less profit for the lender.