All Forum Posts by: Alejandro Rivera

Thank you Dan and Kristina for your comments.  I appreciate both perspectives and that is what it makes the BiggerPockets community so great.

I have come to understand that there is not a size fits all answer for everyone and it depends on both financial and personal factors.  

The loan is for $160K on a $220K purchase price. I do have the HALOC in place (it took about 4 weeks). I do want to conserve "cash" for down payments and repairs of at least 2 properties in the near future.  This is why Dan's comments seem applicable.  I admit that I had been struggling with the decision of which way to go since there is definitely more cost all around going with the Bank loan.   

However, by going with the loan, this lets me keep the cash to buy another day since I am in a portfolio building mode at this time.  I hoping that the time will come where my financing options will be wider. Right now I feel that cash conservation is most important for where I currently am in the journey.

Alejandro

Dan,

Thanks for the 2 cents. I'd say  your comments are worth at least $20 ;)

I think that having the HELOC as a backup, for repairs or for when that great cash deal comes along makes the most sense as you suggest. I appreicate it. Sometimes you need to hear it from someone else as a new investor. Sure, the monthly payment are higher at 6% but the tenants are paying. My short term goal is to aquire 3 more small appartment buildings in the next 18 months. I am sure the HALOC will come handy.

Best,

Alejandro

I have a contract on my first multifamily commercial deal. The property is a six unit 2 bedroom 1 bath apartment building. It is currently fully occupied (month-to-month). It currently rents for (average) $500/month per unit but there is room for improving the property. The plan is to redo floors, cabinets, paint and bathroom tile with the goal is to raise rents to $650/month per unit which I feel should be possible for this area.

I have talked to a portfolio lender and the terms they are able to offer are 6%, 15 year amortization and 5 year term with 30% down down payment.  

I also have the possibility of buying the property outright using a HELOC from my primary residence at a 4% interest rate. This would allow me to reduce the negative cash flow during the renovation period and while I re-tenant the building (I will not be renewing the current tenants contracts after the purchase to do a full renovation).

Then after the property is stabilized I can "refinance" the property or rather get a loan on the property that (hopefully) will have gained some appreciation and repay the HELOC.

I would be interested in knowing what more seasoned investors would recommend in this case. Since I have not done this in the past, one question I'd have is how easy/hard would be to get that loan 12-18 months from now on the renovated property and whether the terms of that loan would be more favorable for a property that I already own (vs. now that I am trying to buy).

Any insights are greatly appreciated.

Alejandro

Jillian,

Michael's tip sent me looking at the Palm coast. I have just now researched a few beach clubs that have units for sale. A few offer onsite property management so it sounds convenient.  I do not know what the HOAs look like. They might be so high in some of this places to make it not work, however is't worth looking into.

According to zillow a few of these places are "buyer" market (cold) so it is worth exploring. 

I will be keenly interested in: 

1. Potential nightly rates (for each season) 

2. % occupancy (per year) 

3. HOAs

4. Fees for onsite property management

Best regards,

Alejandro

Michael,

Thank you for the reference. 

I have been educating myself on the vacation rental model. I think I would greately benefit from going over my ideas with a seasoned professional. I would be greatful if I could connect with your friend.

Alex

Luke,

Thanks for the information I will contact Nancy in the future. 

Since I posted I did look at two 3 unit houses and two single home.  As you mentioned,  the properties close to the intercoastal were flooded and experienced significant damage.  I interviewed a couple of owners including one from a hotel on route 1 a few blocks north of down town and their insurance becam ski high. Tough situation for a would be investor.  

The vacation rental model still works for many there as high occupancy is possible.  As a cosequence, property prices fro multi-units are high as well.  

Alejandro

Hi,

Me and my wife are looking to buy a vacation rental property in St. Augustine FL.

We are trying to figure out what to expect in regards to the %vacancy. We are looking at something near the downtown district and we hope this will be an attractive proposition given the touristic nature of the town.  Any insight will be greatly appreciated. We are also looking to link-up with like minded investors in the area.