All Forum Posts by: Chase Cannon

Quote from @Ty Keller:

Quote from @Chase Cannon:

I have been looking into adding a vacation rental on the east cost (NC, MD, NJ) to diversify my existing properties. After looking at some of the sell prices as well as the weekly rental prices offered May-Sept vacation timeframe, I am wondering if anyone is willing to share their experiences on the finance side of their investments. Clearly, there must be a vacany rate issue in the winter months (I assume). However, some of the prices I have seen based on an assumed 25% downpayment on the 30yr fixed (minus in cap exp.) seem to make the RoR reasonable enough to consider. Any details (good or bad) that they wish to share would be much appreciated. 

Thanks. 

Hey Chase, I thought I'd jump in and add a lender's perspective on this. On regular conventional investment property mortgages I have some clients putting the minimum 15% down and on DSCR loans they're putting 20% down. In either case, I've ordered an appraisal with a Form 1007 Market Rent Summary which will give us the amount of income we can use on the loan. On a DSCR loan, this is the only income on the loan, and on conventional it is a supplement to the borrower's other income. I have seen appraisers provide an average rental rate on the appraisal rather than a snapshot of a particular month and it hasn't caused any issues. Georgia and Florida are my two most active markets I lend on for STRs.

Ty- thanks for jumping in with the lender perspective. Do you have any experience in the St. Simons/Savannah area? If so, would you say your answer above also applies to there? I have some colleagues who, as they call it, have "investment properties" near the King and Prince and Sea Island, but I don't know their numbers. They seem to be income-generating, but not to the extent where they would cover the P&I on the loan, regardless of the two types of loans you referenced. Thanks in advance. 

I have been looking into adding a vacation rental on the east cost (NC, MD, NJ) to diversify my existing properties. After looking at some of the sell prices as well as the weekly rental prices offered May-Sept vacation timeframe, I am wondering if anyone is willing to share their experiences on the finance side of their investments. Clearly, there must be a vacany rate issue in the winter months (I assume). However, some of the prices I have seen based on an assumed 25% downpayment on the 30yr fixed (minus in cap exp.) seem to make the RoR reasonable enough to consider. Any details (good or bad) that they wish to share would be much appreciated. 

Thanks. 

Trevor Fleck, this is a few blocks south of Fountain Square in Indianapolis. 

Originally posted by @Michael Ullman:

@Chase Cannon

Thanks Chase. May I ask which SDIRA custodian you chose to work with? Currently considering a few options so I’d love to hear what your experience has been so far!

I use IRA Financial Trust. This is my third custodian and by far the most responsive and client-oriented. They do live Youtube videos regularly that are very nice to watch during lunch breaks, etc.

Originally posted by @Regina Sloan:

@Chase Cannon thanks for that breakdown! I plan to reach out to them and will mention you. Is this better than working with a local REI that need funds for their projects?

Both have their benefits and drawbacks. And IronClad has multiple ventures. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $151,000
Cash invested: $39,500

3BR 1.5BA SFR. Traditional finance. The original purchase agreement was for 179k. The appraisal came in at 151k. The seller was very understanding and great to work with. ROI was 17% on 179k. ROI is now 19% with the closed purchase price. Need to tip my hat to Rent to Retirement for helping me negotiate the deal. Eric Winkler was great to work with. Depending on interest rates in the future. Probably something I will sit on and hold for a while.

What made you interested in investing in this type of deal?

Building REI portfolio

How did you find this deal and how did you negotiate it?

Rent to Retirement (both on finding the deal and negotiating it)

How did you finance this deal?

Traditional finance with 25% down.

How did you add value to the deal?

Was able to get the purchase price at appraisal value.

What was the outcome?

Probably turn into buy and hold.

Lessons learned? Challenges?

A deal is not dead until it's dead.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Eric Winkler, Rent to Retirement. Highlands Lending. IronClad Group.

Originally posted by @Regina Sloan:

@Chase Cannon Thanks for sharing this information! I have about 75K that will soon be in SDIRA, who did you work with in Indy? I'd love to connect to learn more about how this will help us.

Will look up Nonrecourse loans, new term for me.
and your set "rate,"
you decided on this? 

@Regina Sloan I worked with IronClad Group in Indianapolis. They are great, and they have a connection with Pillario Management Company, which manages all my properties in Indianapolis. A nonrecourse loan is the only traditional finance way to lend against your SDIRA. There are only a few institutions in the country that offer non-recourse loans. They provided three different set rates over different time periods. I picked the 5 year set rate. So far, everything is on autopilot. I have contributions to my IRA each month based on the cash flow.

Originally posted by @Michael Ullman:

Nice deal Chase! Thanks for sharing. How did you fund your SDIRA? Was it a rollover?

@Michael Ullman I funded my SDIRA through a rollover from several different accounts (traditional IRA, TSP, and 401K)

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $127,000
Cash invested: $55,000

Single-family 3BR 2BA. A suburb of Indianapolis. SDIRA deal. 50% done on a non-recourse loan. ROI is 20% annually. Set rate at 5% for the first 5 years. Plan to sell or refinance at the end of the term.

What made you interested in investing in this type of deal?

Using my SDIRA to increase my retirement portfolio

How did you find this deal and how did you negotiate it?

Rent to Retirement. Simple negotiation.

How did you finance this deal?

Nonrecourse loan for 50% down.

What was the outcome?

Holding for now.

Lam Le - did you ever get an answer to your question about transferring your LLC to your trust? It's not very complicated but there are some documents that are probably not common to most people. Hope everything worked out