All Forum Posts by: Brian Cauldwell

Hey @Jason L.!

Don't have much to add about which city. But if the numbers are right, you could be able to use the equity from your current property to help buy the next one. 

As long as the property cash flows and you have a decent credit score, you should be able to cash out refinance your current property up to 75% of what it is currently worth. With that minus what you owe, and fees is what you would get in cash to you to go buy other properties. 

Hi @Eric Rice!

I live in Springfield, Mo, and have seen a lot of people be successful in this market. Love seeing the pros and cons of this market from an outside perspective. I wouldn't have thought of Willard as a good school district. 

There are a lot of good places in Springfield where crime rates are very low and places with better school districts as well. Just need to know the area. 

Would be happy to talk with you about the area and investment properties if you would like. 

Hi @James Russo!

It depends on what you are looking for, personal financials, and location. 

A local bank should be able to provide you with a fix and flip loan. If you don't qualify for that or would prefer to not show taxes, worry about DTI, etc. you could look into private institutional loans. As long as you are in a decently populated area (I would say 25,000 people +) you should be able to find a loan.

Hi @Shelby Elder!

The lender still may be monitoring the insurance. Typically in the DSCR space they sell these loans to large servicers and the insurance provided to close the loan was to meet certain criteria. If they aren't able to sell the loan due to changing your insurance policy, there may be some issues. I am not sure what that would lead to though.

However, if DSCR is tight and you had to get this insurance to make the loan work, getting new insurance may make the cash flow for the property tight or even negative. Is there a reason you are wanting a different insurance policy?

Hi @Chandler Alexander!

We work with several lenders that lend to out-of-state investors. I would find a lender that does that if the area you live in is too expensive. 

Hey @Luke Werkmeister-Martin!

It depends on what you are looking to do. Clearly, house B has a bunch of equity that you could use to go buy other properties. You could most likely pull out around $400,000+ from house B and the property will still have cash flow. 

Then it just becomes what you want to do with that money. It looks like the two properties you have are an equity/appreciation property. You could go buy more of those, you could buy a bunch of cash-flow properties, or a multifamily property. 

Or you could go into fix and flips, or BRRRR.

There is no right way to move forward in this space and it is about what you want out of it.

If you are looking for cash flow, you could invest that money into the Midwest in an area that you like. Depending on the market you could find a property that is rent-ready for around $100,000-$150,000. With an 80% loan to acquire it, you would bring around $28,000-$40,000 to the table, and buy 10 properties. 

You could buy properties similar to what you have, but they are going to require you to put a lot more down if those rental numbers are accurate. 

Fix and flips, with the amount you would be getting out you would not need to get a loan unless you wanted to. That would help maximize your profit, or you could get a loan and do multiple projects at a time. Sell or rent and refinance, then go on to your next projects. 

Multifamily property, you could put all your money into one basket. Hopefully, the cash flow and potential appreciation are enough to keep you satisfied. Then in the future, sell or refinance and you can upgrade to a bigger/nicer multifamily property. 

Hi @Matthew Raby!

I work in the DSCR space, and for this space I can answer some of your questions.

For the personal guarantee, I do not know of any lender who will not need a personal guarantee. The loan would close under the LLC but they will require a warm body to be a guarantor for the loan.

If it is a long term buy and hold (property that does not need rehab/bridge loan) 80% LTV is the max that I have seen.

As long as the funds are in your name, or your business, they can be used to show liquidity. The funds do not have to be in your business bank account, just in account that you can be tied to yourself. 

Hi @Aspen Potter!

It depends on what you are after. Two different factors for ROI. Cash flow and appreciation.

If you are looking for appreciation a lot of people seem to think Georgia, Texas, Florida, and North Carolina will be good bets. 

If you are more interested in cash flow, then the "Midwest" is going to look the best. Places like Ohio, Missouri, Indiana, and Pennsylvania. For long term rentals, they have great cash flow. 

Hey @David F.!

From everything that I am hearing, the spread on the mortgage rates will start to narrow once lenders are comfortable with the market and we start to see some stability. 

So, either the 10-year rate stays the same for multiple months or falls consistently that is when we should expect to see the spread start to narrow. 

Hi @David U.!

Free and clear properties and looking to expand is a good problem to have!

Another option that may help. You could always refinance the two properties at low leverage so each still cash flow on their own. You don't want one property to be supporting another in case things go wrong. So, finding a cash flow you are comfortable with each property would be your best bet. 

That way you can leverage those properties to buy the third unit, or get another low leverage loan to keep additional cash on hand for the new property. Liquidity, leverage, and cash flow will be your best friend in scaling your portfolio, and it can be a balancing act at times as well.