All Forum Posts by: Andrew Magoun

Quick update: 10 yr fixed would revert to prime at the end of ten years. 
30 yr fixed rate came down to 4.5% with no points. 
Both still have no prepayment penalty (unless I refi with another bank).

@Jim Spatzenfeld and @Alan Ouellette, good idea on asking about what the terms are after the 10 yrs and where the rate goes to then. I hadn’t thought about that yet (more than there’s a good chance that rates will be higher than they are today.) If I did the numbers right, rates would have to go up to over 10.25% for the payment amount to be the same on the remaining principal as it is today on the initial loan.

In terms of goals, I'm a buy and hold investor. This SFR is part of a larger portfolio of about 30 doors (a mix of smaller multis mostly) so overall both the property and portfolio can make the payments work at either the 10 yr or 30 yr rate.

@Joe Splitrock, the 30 yr fixed is able to do LLCs. They’ve just started to offer this and only do it up to 4 families. Thanks for double checking though. 

I’m leaning heavily towards the 10 yr as I like the idea of having a lot more principle paid down by that time as opposed to the 30 yr. As you mentioned, the payment differences isn’t that much. 

@Nik Moushon, I totally agree that rates will be higher in the future, hence wanting to do something right now to lock in these low rates. We haven't found other banks that are willing to give 30 yr fixed on an SFR when it's held in an LLC. All other ones see LLC and immediately go over to the commercial lane with 10 yrs being the longest fixed they'll give.

I own a property property outright and am looking to do a cash out refi of it. The property is in an LLC but is a single family. In talking with different local lenders I have two options:

Option 1: 30 yr fixed rate at 5.25% with a bank I don’t have a current relationship with.
Option 2: 10 yr fixed rate at 3.35% (20 yr amortization) with a bank I have a relationship with.

Property is worth about $425,000, looking to take out ~$300,000 to reinvest in additional properties. No prepayment penalty on either option unless I refinance with a third party.

Which is the better deal and why?

Thanks for the help!

Does anyone have any experience with drain water heat recovery units? Would be looking to install in smaller multis (12 units and below) in Maine. Thanks for the input. 

@Nicholas Olson, if you're in the Portland area let me know. I'd be happy to chat.

The podcasts are a great resource. I've listened to a good deal of them and almost always find something new.

I'd appreciate some discussion on how passive losses from real estate investing can or cannot be used to offset income from other sources (investment, etc.). From my understanding, and I'm not a CPA nor do I play one on TV, you can't use real estate "losses" (from a tax point of view when depreciation, etc. is factored in) to offset income from things like investments in the market. That is, unless you're a "real estate professional". So many of the benefits of real estate (like having positive cash flow but from an IRS perspective a net loss and then using this net loss to offset other sources of income) aren't actually available to many people. Looking forward to the show!

@Nicholas Olson, when you're looking at banks make sure you interview a bunch of them. Once you get a few that look promising don't feel bad playing them off each other a bit at first. I'd suggest once you get a bank that'll work for a loan that you do your banking there too. It helps build up the relationships that'll help in the future. As has been said in here I'd also steer more towards local/regional banks. You'll be more of a person and less of a number to them that way. Good luck!

@Brett Jones, is the late paying tenant a good tenant otherwise? If so, it might be worth it to put up with rent coming in late. I have a tenant who consistently pays around the 10th. So they’re always late, but not late enough to trigger the late fee. While it’s definitely frustrating to have to wait that long for rent, the tenant is otherwise awesome. We almost never hear a thing from them, and when we do it’s not their fault (like there was a leak in their bathroom ceiling because the upstairs tenant left the water running and it over flowed). So all in all it’s cheaper and less hassel to keep the good tenant who pays a bit late than to evict them (or even threaten them with eviction). That said, these are awesome tenants so probably not the norm.