All Forum Posts by: Andy D.

@Bill Gulley You do realize that an interest rate of (even) 7% towards the end of next year is absolutely unrealistic, if not even impossible, right? ;-) This, considering the reason of the current low rate and the fact how low it is. No stimulus program will make the Fed hike the rates that much.

@Ethan S. I'm not sure I understand what you are actually trying to ask. Because I guess it's obvious that a higher interest rate will make financing more expensive. And anything from there should be logical too, or not?

@Patsy I can only second that. None of my mortgages are with one of the "well known big ones". They suck, sorry. At least for retail and if it's not cookie-cutter. No experience on the commercial side with them, though (when it comes to mortgages).

@Bill Gulley Not only many "private lenders" don't know that. Apparently. Because I didn't know either. ;-) Thanks for pointing this out!

That's one of the reasons why I respectfully declined several offers for refinancing to a lower interest rate. The costs for doing so would not have outweighed the savings over a (for me reasonable) foreseeable period. Talking about investment properties here, though.

When it comes to private/hard money I actually think it makes even less sense to have lower interest rate in return for more points. Because, well, one is looking for as much money available as possible to finance a purchase. You need the money to buy the property... Paying points reduces available cash and only for the benefit of saving some, say 2-3 points on the interest rate for a loan which, typically, will be paid back within a couple months. Wouldn't make much sense (at least not to me). For a conventional 15/30 yr mortgage that would look a bit different, though, as described by Bill.

However, interestingly enough, as per Fannie guidelines such cash from a cash-out refi is, for the purpose of reserve funds, not accepted:

https://www.fanniemae.com/content/guide/selling/b3...

Without having thought about it much this doesn't strike me as logical but I don't know the rules of a cash-out refi so I'm probably missing something.

As far as I'm concerned one should look at this aspect of using an LLC more from a psychological point of view. Typically anyone with a bit of knowledge (and certainly a lawyer) can find out who the owner of an LLC is. But that's not really the point here, I would say.

It's more about who is the contracting partner, i.e. the person visible to the tenant(s). And that's an LLC. And therefore it's not Mr. + Mrs. Smith as landlords (with their home address as the place to deposit any checks etc) but the "AwesomeLandlord, LLC" with a PO BOx (for depositing checks) and a business phone number. It's a first layer of "peace of mind" (leaving aside any legal benefits of properly using an LLC) to not be too visible as a private person. Because who doesn't love the tenants spontaneously showing up at ones private home at 9pm because of a squeeky door hing, right? Using an LLC and the associated information should prevent this for such situations. For any of those wrong-doers-landlords it will not help. And it should not, either.

Without wanting to give any legal advice (obviously), this should, I guess, satisfy the WI law. Because such a law could not possibly prohibit the use of legal entities. It just wants to ensure that the information of the people actually running the show is available if one starts to look into it. And, more importantly, the contact information of a "manager" (of whichever sort) needs to be readily available/visible.

@Eugene Finley Isn't seasoning of funds a non-issue when doing cash-out refinancing? Because it's obvious where the funds come from. Would be surprised if seasoning played a role for such a situation.

Actually, I understood the statement by @Matt Hoyt (tagging really doesn't seem to work across different threads...) as such that he simply looks for lenders who do not (need to) follow the F/F guidelines. But maybe he could shed some light on that - if he would only knew that we are talking about him LOL

This is an interesting point. It also affects, I guess, all those not resident in the US as they obviously do not have a primary residence in the US. I'm curious what will be said about this.

I agree with @Thomas S. His statement includes many more (hidden) aspect such as, for instance (to name just one) less costs (= less money "wasted" = more money available) related to the transactions: every building you buy will have a base amount of costs associated with that transaction. In essence it makes no difference if that building has 1 door or 12, the costs of buying are (certainly when spread out over the doors) more or less the same. This is even more true if you are financing due to the added costs from that end. The fewer transactions the less costs.

On the other hand, the more doors, the more money should come in. Whether that particular multiplex ultimately is a good deal is, of course, a totally different story and obviously something you need to figure out during your due diligence on such a property.

Then again, as always with real estate, this depends on the market you are investing in. Some people swear by SFR, others only do multi-units, others only do Condos/Townhomes with an HOA etc. etc. You need to feel comfortable with the property you are investing in, and you need to understand that particular business to be successful: owning a multiplex will be different from owning one or more SFR. Not earth-moving different but still.

And since you need to generate income it means that you do not have enough money available so this in turn means that you will have to use leverage to increase the amount of doors you own. And that is, with respect to your goal, a good thing. At least  in my and Greg's and other people's opinion. ;-) Good luck. I myself am trying to achieve what you are striving for!