All Forum Posts by: Allan C.

@Emily Beatty we dealt with the same issue. Our solution was to ask appraiser to conduct the appraisal via facetime. This only occurred on 1 of a dozen units so appraiser didn’t take issue with the proposal.

@Anthony Fecarotta if you have to second guess backing out of the deal and losing $1k, then my guess would be that you may not have enough reserves to carry the property if the downtown extends longer than you anticipate.

If this place also requires renovations, how much contingency do you have in place for cost escalation? Do the numbers still work if your budget bloats by 30-50%?

@Hai Loc What % of your market buyers are domestic vs foreign? With extended oil price wars your domestic buyers will lose buying power as CAD gets devalued. Canadian properties will start to look cheap, so possibly more foreign interest?

I suggest waiting for clarity on the Saudi oil price war before taking further action. Covid alone creates enough uncertainty, but doubling down macro events of covid and oil wars should concern any rational and informed investor.

Thank you all for the input. This was simply a cash out refi endeavor. After further dialogue, the lender removed the requirement.

@Shad Rich smaller expenses we book to the first asset purchase by the LLC. Larger expenses we split between all assets owned by the LLC.

Has anyone else experienced banks placing conditions on fund draws approved for cash out refi on a portfolio loan?

Specifically, we have a bank requesting that we show executed purchase contract before being allowed to draw funds. This is a non-starter for us, but before negotiating harder or walking from this lender, I’d like to get a pulse from others.

@Tze Lee talk to banks and secure a portfolio loan.

@Johnny Lau you have better control over tax efficiencies buying and holding yourself.

@Shuo Li the property you have will have a Land basis and a Building basis. You can depreciate the Building basis to reduce your taxable income.

For example, you buy a $100k SFH. You can say that the Building is worth $60k and the Land is worth $40k.

You can depreciate the $60k over 27.5 years, or $2k per year. If your net passive earnings before depreciation is $5k, you are taxed on $3k instead of the full $5k.

Note - Building vs Land valuation is a separate topic you’ll need to understand. Depreciation rate is also a separate topic.