All Forum Posts by: Chris Coleman

@Terrence Malloy there are a lot of REI Meetups in the DMV...single family, multifamily, and commercial. You can meet a lot of like-minded people.

@Russell Brazil actually hosts one of the largest ones in DC.

@Jonathan Farber if you're getting conventional financing, the banks like to see 6 months PITI. That doesn't have to be immediately liquid cash. In can be in an investment account that can be liquidated if you need, such as a brokerage or 401k.

Great!  The one thing I would suggest is when negotiating with the Seller, try to get a loan term that is sufficiently longer than what your project timeline is expected to be...and give yourself some margin for error.  For example, if you estimate 6 months for the rehab and refi, then you want loan terms that are at least 9-12 months.  This gives you some cushion room to manage things that inevitably don't go as planned.

Also, try to avoid pre-payment penalties if possible, or if not, make sure any such penalty still fits within your overall ROI numbers.

@Matthew Bruce Bailey you can definitely cash out lower than 75% LTV. Anything lower than the Lender's maximum LTV can be however much cash you want.

The interest rate will depend on the Lender. Your credit score will also play a role. But you're probably getting close to the Lender's prime rate at 75% LTV, so going lower won't necessarily mean a lower interest rate.

You could ask the Lender about paying points and buy the interest rate down.

@Kristian Conway I agree with @Odie Ayaga.

Hard money lenders generally care more about your experience, the property, and the business plan. They want to see these things come together.

I am not familiar with the JMU/Harrisonburg market.  But definitely worth considering.

Absolutely agree with @Caleb Heimsoth, I have moved into multifamily syndications over the last few years to get higher returns, and preferred returns at that.

Turnkey will look attractive again when the market slows. But for now it’s pretty expensive.

@Joey Hicks nice! Congratulations.

Sure. I invest for cash flow, and look for around $300 per month, after PITI and property management. That was much easier 5 years ago, and even 3 years ago. But even today, I will not go under $250/mth.

Note, that is Cash on Cash. I do not consider equity from appreciation in my returns, nor do I consider equity from debt pay down in my returns. And I do not include tax deductions in my returns. I look at the real Cash Flow that will be deposited into my bank account. Of course, appreciation is great when it occurs. But I do not bank on it when purchasing a property. I will say, however, I've had two properties that I purchased with REI Nation appreciate more than expected, and I was able to cash-out refi within just a few years and get my investment back. Both were in Memphis suburbs.

Most of my properties are 3/2, 1300-1800 sq ft.

I scrutinize the neighborhoods probably more than the physical property.  I know its Class C property, which is good as that's what we invest in for cash flow.  However, I still want a safe community for my renters.  Nice and safe neighborhoods equal better tenants who stay longer, in general.  One of my best cash flowing properties with a long-term tenant is actually in Bartlett.  I do recommend that area, as well as Cordova.

I recommend carefully analyzing anything in Texas these days due to very high property taxes.  You really have to get high cash flow to make the numbers work, because the property taxes just keep increasing every year, especially in Houston/Harris County.  I still own in Texas from several years back, but property taxes can eat up your cash flow more than expected.

Well, nothing really happens as long as you can continue to pay the mortgage.  However, if you're not cash flowing or at least breaking even, then the money to pay the mortgage will come out of your pocket.  So in that case, you're losing money every month on a property that is not even worth as much as you owe on it.  If you can't pay the mortgage, then you can try to sell the property in which you get less than you owe on it, or the bank eventually begins foreclosure.

Therefore, two rules of real estate investing...invest for cash flow and do not over-leverage.