All Forum Posts by: Nicholas Weckstein

In stocks don't they call that a dead cat bounce? I don't see how prices are ACTUALLY going up. I don't think VALUE has gone up. if anything I think its gone down. I think that most sellers haven't came to terms with what the real value is now after this crisis. They're still on the high of the hot market we had right before this started. also there is essentially an artificially created "limited supply" on inventory right now because most markets are closed down. That could explain why some owners raised prices. 

don't think its going to last very long. 

Is this a cash out refinance ? or just refinancing the current debt you have? seems to me if you have 18 years left your close to the half way point of your mortgage. I don't think it makes sense to JUST refinance for another 30 years to lower your payment 200$ on a place that you've already had 12 years. 

you might also find that the 15 year rates are even LOWER. so what would happen if you refinanced the remainder for 15 years at say 3%?

unless your looking to take cash out for something else. I don't see the benefit in paying into a mortgage for a total of 42 years just to save 200$ a month for 30 of them. which is $72,000 LESS but you've already paid more.

I think it would make more sense to see if you can adjust your mortgage to have a payment that is roughly the same at a shorter term then to extend 30 years

well you left out some details, but if you are using financing then a 9% cash on cash sounds kind of low to me. you may need to adjust your market, your search criteria, or find off market deals that you can be creative with. 

I think ultimately it comes down to what type of returns you WANT vs HOW you're going to get them. 

if the numbers work but not at what you can afford to pay...then the numbers don't work. (in that area with that criteria). that's not to say you can't find a value add opportunity for a deep discount and put some sweat equity into it. 

if the numbers work at 400k and not 500k well then you found out you can't pay 500k. how can you get it with 400k? can you? if you can't then you re adjust. most property owners who have the property listed on the MLS may not want to offer that huge discount.

are you looking for turn key? then your going to pay key money. Be creative, don't be scared to make offers. but remember, if it only works if you pay 30k less then asking. then you'll have to offer even less to hopefully land in that area.

Pipes, plumbing, fixtures, outlets, wiring, foundation. as time goes you'll "investor proof" the property. What I mean is that essentially everything will eventually go or need updating depending on how long you keep the place. Update preemptively what you can that would cause operational issues and the rest will happen in dribs and drabs. When you do new cabinets and counter tops you wind up doing the plumbing too. 

the biggest things are going to be the roof/foundation/siding/HVAC/Plumbing/Electric. if the bones are good, then these will just need updating over time. 

THIS is why always budgeting cap ex cost in your monthly numbers is so important.  its how you stabilize a building for holding. 

So I wanted to take a dive into what we as investors, are thinking about the current state of the market. But more importantly which direction it is going. Is now a time to buy or not?

would love to hear what other multi unit investors are doing. 

ill start...

Personally I feel that right now is NOT the time to buy. As bad as I want to get my liquid money into cash flowing asset based debts, the market is too shaky to make a good buy. Right before this started, at least in my market. It was  extremely hot. Over night the whole industry got turned off. When things start to turn back on, many owners will list or relist their properties at what they wanted right before this happened. Those prices just won't be current with the new reality. It is simple trickle down economics. Most owners will take some time to come off the high of what they thought their buildings were worth. 

My strategy is to wait this out and reassess the market in 3-6 months time. Many investors agree we are going to see prices come down. while there may be some type of urgency to buy based on how difficult buying has become. I believe the smart move would be to remain patient and take advantage of the coming economic down turn. 

Even with the rates being SO LOW. it doesn't make sense to over pay on the total price just to get a low apr. Id rather pay 25% less than top of the market prices, but pay multiple rate points higher on a good deal. Than to over pay on a building I bought with money that I got for next to nothing. 

Curious what others are thinking? how are you preparing?

Hey guys. Would love some help with how to finance this one. Here’s the deal

7 units 2 buildings

4 vacant

2 rented to non lease having tenants

1 needs rehab down to new Sheetrock.

Purchase contract at 205k

Projected gross rents $54,000.00 !!!

Banks are giving me issues because it’s not rented and 3 separate lots on one sale.

The numbers crunch out awesome. I need like 3/6 months time to stabilize the place with some type of interest only note and then approach a bank for 75%LTV on a cash out refinance.

My other question is the appraisal on the cash out refi. The Net income for the building is 26k a year in a 8%-12% cap area. (Depends on what part of the township) this is in a good part for sure. (I own another in the same township.)

I’m just trying to figure out how to structure this for the acquisition and the finance/refinance side.

Any tips? Or pointers? Thinking of asking the owner to hold a note. Or take an interest only type of thing with him.

@Jared Smith these are my favorite part of real estate investing. Formulas!! Just tweak them to your wants and needs. Adjust based on area and market and you have your success template!

Thank you for sharing this!

@Chris K. That was a very good point by the way. Infact I’m having some issues with it because it’s 2 buildings and 3 lots of land all on one deed. Also not rented.

@Ronan Donnelly hmm duct work can be very expensive. Plus a lot of the units have drop ceilings in some rooms. Not sure how it all plays in. Yup for sure will have to speak to a professional.

Thanks!

@Ronan Donnelly the mini splits are under windows no? This building is 2 stories on one side and 3 on the other. I’m not sure if changing out the current system would be cheap. I’m sure quite expensive. But 10k? 20k? 30k?? What bothers me is that the gas lines run up the wall into the ceiling and are visible. The city just did the annual inspection on it yesterday and it’s fine so. Idk.