All Forum Posts by: Anatole Doak

Thanks Joe, I appreciate the feedback! 

I've been emailing and calling different lenders in the greater Philly region to cash out refinance on a property I own free and clear under an LLC. I was told by one lender that I need to provide what I'll use the funds for which I thought was strange... when I said to purchase another asset, she told me that I'd need the agreement of sale in hand for them to cash out refinance, but when buying from wholesalers in cash who need proof of funds this presents a problem.

I feel like this isn't typical, but maybe with COVID19 there are new restrictions? Has anyone else ran into this?  Or if you can recommend a lender in the greater Philly area who has good terms on a cash-out refi can you DM me? 

Hi @Shashy B.yep, I did find some- send me a message and happy to share details of the people I talked to. 

Hi everyone,

I live in New York, but I'm looking to purchase a townhouse in New Jersey outside of Philadelphia as an investment property. I've heard some Credit Unions will lend to an LLC to purchase property, and others who don't lend to LLCs still give favorable terms to individuals. Looking for recommendations for a credit union that lends in NJ to an LLC and also open to recommendations for good credit unions to work in general?

Thanks,

Anatole

Hey Andrew - in terms of pulling equity out of the properties, you could do a cash out refinance or look at a home equity line of credit.  I'm not a lender so I don't know specific terms, but if you call around to local banks you should be able to pull out at least 75% of your equity with a cash out refinance.  Just be sure that your mortgage would be covered by your rentals.  Quick back of the envelope math doesn't sound like 3500 in total rental income minus 1k in expenses would cover 525k in a mortgage (est. 2,800 a month or so).

Agree with Jonathan above that the with 700k in property you could spin off much more than 3500 in rental revenue.  But again, depends on taste for leverage, how important cash flow is to you, stomach for dealing with difficult tenants, if you're going for more of an appreciation play, etc.  

@Joseph ODonovan great points, thanks.  This is in Cobbs Creek.  I've driven through a couple times and have spoken with other Philly investors about the area who are pretty positive about it.  Definitely a C class neighborhood, but seems like there are worse places in West Philly.  That's horrible about the fireman... agreed wholeheartedly that I don't want tenants doing anything illegal in the property.  Is $5k a good estimate as to how much it will cost in eviction/attorney fees?  This would be my first eviction.

@Dennis M. the tenant was blocking the doorway screaming at my real estate agent and the home inspector, so they decided it was time to leave.  I couldn't be present at the inspection unfortunately.  

@Eric Carr thanks, will double check the lease that the seller provided me with. 

Seems like the consensus is it would be best if it's vacant upon purchasing, but if that's absolutely not possible at least make sure the inspector gets down to the basement to check it out.  

Thanks for the feedback! 

Thanks, appreciate the feedback! Spoke with the seller and he agreed to send a letter to the tenants stating if they don't let the inspector downstairs to the basement they will be evicted.  

Hi everyone,

Interesting situation happened over the weekend and would love some feedback/advice.  During the inspection on a property I'm buying in the Cobbs Creek are of Philadelphia, the tenants were present and refused the inspector access to the basement of the property.  They started into a story about how there's a flea infestation (they don't have pets) and how it's "unsafe" to go down.  Keep in mind, when we walked the property less than 2 weeks ago when the owner and my rep went to the basement they made no mention of fleas or gave us any warnings that they shouldn't go down to the basement.  The basement was cluttered and had a lot of junk in it, but no mention of fleas.  When we insisted we needed to go down for the inspection, they started screaming and yelling about how we couldn't go down and so the inspector decided he needed to leave.  In addition, the house had a marijuana smell to it.

I'm thinking it could be one of a few things:

1) The tenants are concerned the owner is selling the house which means they might lose their tenancy and this was a way for them to disrupt the process to "keep them in the house"

2) There was marijuana in the basement and they forgot the inspection was happening, and they didn't want to get caught with having contraband in the house as that would be means for eviction.

3) There is actually somehow a flea infestation down in the basement (why the basement though when they have no dog and haven't reported it to the landlord?) and so the inspector cannot get into the basement.

The owner is a friend of mine, this house is a great deal well below market value and I still would like to pursue it even with the complications above.  However, I'd be hesitant to buy it without a full inspection and would love to get the inspector in the basement.  I'm calling the owner later today to figure out a solution, any advice or feedback based on what I explained above?  

Hey Jr - I do the same thing, live in NY but invest in Philly.  Depending on your budget, Grays Ferry could be an interesting option for you too.  Right next to Point Breeze which has had tons of gentrification over the last 5 years or so. Right now Point Breeze is oversaturated with investors and there are no deals to be had so people are looking at Grays Ferry. 

Be careful with Temple - look up where the Temple police jurisdiction lines are. There's a clear line that Temple police patrol (you can look it up if you google it) and if you go over that line student demand (and property value) goes down. Also, there's tons of new construction in and around Temple right now. Does that mean there's more demand of student housing so a SFH makes sense to rent to college kids? Or does that mean college kids want new units in a multifamily close to campus? Not sure, but something to be aware of.

Think a lot depends on the neighborhood in West Philly.  Some areas are better than others, and can even be block by block - have you driven through the area and know which pockets are better than others?  Zillow can also be a good indicator too, check out the comps right next to the place you're thinking of.  You'll see rent pricing and also the sales prices or at least estimates of the houses around it.

Also, if it is your first rental are you buying cash?  Wholesalers typically don't allow for inspection contingencies which could make it hard for you to get funding if you're not paying cash or working with their in house hard money lender. 

This is totally not meant to discourage you, super pumped that you've found a deal! But I'd just encourage you to do your research and confirm the numbers the wholesaler gave you. Call contractors to get estimates, find out what houses around are going for. If you think 65k is the realistic ARV, why not try and find one on the MLS that's in good shape and doesn't need repairs and negotiate down to 55-60k? Would still give you about the same cash flow.

Anyways, just my two cents - hope it's helpful and glad you're out there meeting people and making offers!!!