All Forum Posts by: Allan C.

@Mike Partington look into portfolio lender but don’t cross-collateralize all the assets since they are all at risk if you fall short servicing the debt in the future. Your loan size is not too large, so maybe set up 2 or 3 bundles of properties under 2 or 3 loans.

@Paul Zhang don’t worry about not having working fridge for a few days while you’re replacing the old - it’s a fact of life that everyone deals with, whether you are a tenant or an owner. You can always buy an ice chest and have tenants store perishables there during the replacement period.

@Ben Zimmerman most lenders don’t allow you to pay mortgage via CC for this reason. Most businesses start factoring in CC transaction costs into their sales prices, so eventually this comes back as a pass-through cost to customers. In short, if you are not using CC to pay for services, you are subsidizing businesses.

@Ricky Dorn if you’re looking to buy a tenant occupied property in this market you should be prepared to manage negative cash-flow for an extended period of time. Beyond not being able to raise rent more than a regulated %, you should also be ready for a large property tax hike.

@Donna Williams be mindful if all members of the oos LLC have CA addresses.

@Anibal Mijangos can you share your thoughts on what is driving development in the area? I’m curious to know if the economy is diversified and resilient. Thanks.

This type of thread will always get the same responses. Those who don't invest in high cost locations will say never accept negative CF, and those who invest in high cost locations say appreciation is better form of wealth generation than meager mid-continent CF strategies.

While some will fundamentally never accept appreciation as a value driver, I seldomly see a sophisticated investor who can build their own IRR model (vs relying solely on simple CoC calculations) say never to negative CF. Defining an exit or long term hold strategy is important for high cost markets.

I would not likely invest in a negative CF coastal property when we are nearing the top of an economic cycle, but i would be all-in on negative CF coastal properties when markets contract. 

@Jennifer Gardner if you had a SFH I would not sell in your situation, but would cash out refi. The condo situation makes it a bit gray. However, one of your biggest advantages is that your property tax basis is lower relative to current investors, so you have structural margin to capture going forward.

Remember that anytime you sell you have transaction inefficiencies (commission, tax, etc), so that is a barrier to overcome.

You’ll likely have more appreciation coming your way so that gain will beat any cash flow you can capture in Midwest markets…. With a lot less headache

@Jason Love most small multifamily owners don’t allow you to visit the property unless you submit an offer, so keep that in mind.

@Adam Wells you have transaction inefficiencies when you sell (ie commission, taxes, etc), so if your goal is long term hold then it seems like a cash out refi to 30 yrs is a good option.