All Forum Posts by: Alex Roter

Hey @Janetta Olaseni, if you are looking to expand your portfolio, you can pull equity out of the properties you own currently and use that to invest in more real estate (or any other investment types).

You could even do a 1031 exchange, which would allow you to avoid capital gains tax by exchanging it for like-kind property. This strategy could allow you to move out of the condo market into another market, or exchange multiple smaller properties for one larger. This may alleviate some of the headaches of managing the properties you currently own.

@Marie Hill Office, retail, warehouse, self-storage, and car repair shops are in constant demand--and would be great options to look at. Although more and more and working from home due to COVID, so perhaps office buildings are not so relevant nowadays. 

Try finding properties in metropolitan areas (heavily populated) because your tenant will likely get more business (and less likely to go out of business). Also, there will be more sales activity to help support the property value (through sales comparables) when it comes to financing.

Restaurant properties that are stand-alone (not connected to other buildings) are riskier because restaurant businesses, in general, are difficult to keep afloat. Additionally, due to a stand-alone restaurant property's special-use case, they cannot be used efficiently for anything other than a restaurant. That's why they call it "special-use."

Avoid any property that used to be a gas station or a dry cleaner (on-site cleaning), because mortgage lenders are likely to turndown these loan applications due to environmental issues.

@Denis Ryan There are very competitive DSCR lenders that offer delayed financing (even 1-day after purchase). Although, it may be very difficult to find financing on non-warrantable condos. 

@Anna Tankersley

@Anna Tankersley For the handy-types, fix-and-flips are great because you can perform the renovations yourself (or with little help). I prefer buy, rehab, rent, refinance and repeat strategy (BRRRR) because you get monthly cashflow, tax benefits, and if you're lucky-- you can benefit from appreciation (if the market is in your favor).

The bigger picture, however, is that $20K is not enough to cover typical down payments AND closing costs. $50K cash-in-hand minimum to start with, to acquire the property, cover closing costs, and possibly have some leftover to perform minor cosmetic renovations.

@Le Jia Yes, 70% ARV is typically what we see with investors with 0-2 properties (currently owned, or recently sold) experience level. For more experienced investors, we see around 75% ARV, sometimes 80%.

@Zakee Richardson You can download Credit Karma app for free on your phone or computer. They will help you monitor your credit and provide you with suggestions on how to improve the score. If you need dramatic improvements in a short period of time, I would recommend talking with a credit repair specialist.

@Matthew Lee If you obtain the loan from a lender who does not report on credit, there's a chance that the Underwriter on the future loan does not recognize the debt. There's an even better chance if the property is held in an entity to begin with. 

@Justin Taylor There are many different terms you could see from a Hard Money lender, and they are ever-changing. I've seen interest rates from 8% up to 12%; Points can range from 2-5% of the loan amount; Interest Only options from 1-5years. 

It may be worth looking into Soft Money (alternative to Hard Money) financing. They have more desirable terms, such as fully amortizing 30-year fixed, as well as Hybrid ARMs and Rehab loans. Interest-only options are available as well. They may, however, take longer to obtain financing (compared to Hard Money loans).

What is the reason for looking at Hard Money... is it due to your credit score? Or perhaps is it an income verification hinderance? Discussing your options with an advisor can help steer you into the right direction.

@Isaiah Wily Although interest rates may be higher on a DSCR loan, you can always refinance out of the loan (into a conventional loan) once your tax returns are back on track. Then, you wouldn't need a partner on the loan to qualify.

Couple things to keep in mind... the down payment requirements are larger (around 15-25%) on DSCR loans. Also, they may come with prepayment penalties---which could be costly if not structured correctly upfront.

Hope this helps!

The existence of large corporations, college towns, and metropolitan areas (non-rural).