All Forum Posts by: Clayton Silva

 Oh Hey Brian!! I didn't know you were on the forums here! We've met a few times at LAR.  The next meet up is actually not at Panera, I think the group has outgrown the location and the next one is: Saturday the 22nd: La Boulangerie
2324 Grand Canal Blvd # 1 · Stockton, CA

I am not a CPA, but I do not believe that you can depreciate any home that you occupy.  Even multi unit.  Definitely consult a CPA.

Full disclosure: as a lender, I have a bias towards leverage in general (as well as a healthy understanding and respect for it). I personally recommend cash out refinances (yes even with these rates). I am currently cashing out a 2.25% interest rate into an 8% rate, and the property is still going to cash flow and I'm going to have 70-90k tax free to go out and buy more properties. I view all money/equity as baskets of money. I would rather have money in my bank where I can use it rather than tied up in one property. As for private money lenders that is definitely an option, but I would tap into existing equity first before going to them. (Personally). Depending on your situation you could buy it a second home for 10% down or you could do a 20% down DSCR. There are a lot of options!

Hope this helps!

Repair CapEX and Vacancies are all market dependent and property dependent.  Factors such as age, size of property, marketability and then population and renting parameters are all going to impact those inputs.  For example, in the market I invest in, I rarely have vacancies.  And if I do, I keep my houses at the top of nice rentals and my rent a little below market to get the best tenants and they fill up quickly.  I run my numbers as 20% capex and 10% property management.  It's more conservative than most but it works for me.  

For property management, it can be 8-12% for long term rentals and 20-30% for short term rentals.  Hope this helps!

@Jerome Nunez I typically categorize repairs into 3 categories, 1) must repair ASAP (these are safety hazards or major issues or anything that would make the property uninhabitable for the time being.  Anything in that category I will go back to the seller and renegotiate price or terms.  I also give a copy of the report to the listing agent because now they are legally obligated to disclose any of those issues to future buyers as well in the chance they want to try to back out with me.  Category 2 is likely to be fixed in near future/minor repairs (these are cosmetic repairs or things that will have a short remaining lifespan (i.e. a water heater with 3 years of useful life or less etc).  These I will budget into my capex for the next couple of years until I can repair/replace them.  I factor these into my purchase and see if the deal still makes sense.  Then category 3 is mere suggestions.  Inspectors have to find every little thing wrong with the house for liability purposes and a lot of it is normal wear and tear of a property.  As long as it won't result in bigger issues down the road I tend to ignore most of those ones. 

That is exactly what I do. I have LLC's by market where the properties are located and then separate business cards for each LLC plus a separate checking and a separate savings account per LLC. It has been pretty easy to stay on top of my finances that way.

I was also asking about markets you are in because we offer the best DSCR loans out there.

Hey Jonathan, short answer: depends.  For any conventional lending like Fannie/Freddie etc., the answer is a hard no.  You absolutely cannot.  For some commercial lending you can.  If you were looking to refer clients to a lender that was doing 1-4 unit residential standard lending, they would be legally prohibited from paying a referral in that case (as in your example, that would not work). 

But if you had your lending license and say your brokerage worked with a commercial bank on a commercial loan and you sent the client in and you gathered the documents and did a lot of the processing, you could, potentially receive a referral fee from them as they are not beholden to the same lending regulations as conventional lenders.

The problem with these arises when it comes time to refinance a lot of banks/lenders will try to cut you out and market directly to your client down the road.

@Rabekah Siatunuu in SD, I would expect to pay a portion of the mortgage yourself. The goal is to own the asset for less than the cost of rent. If you currently pay 2500/month in rent, the goal ought to be to pay less than that in your portion of the mortgage. (Example mortgage of $4000/month but tenants pay 2500. In this example you pay 1500 but that's less than 2500 you'd be paying in rent plus you own the house + appreciation+ tax write off for interest expense). House hacking is the best way to get started in CA.

@Alex North we do have some DSCR lenders that can do 85% LTV. However, starting with 30k, you may want to consider either a partner or a rental arbitrage to increase savings. 30k will get you into a good rental with good furniture! If you can rent a place for 2-3k/month and make 6-7k/month it wouldn't take long to save up for a bigger down payment.

I would have said the rate is a little high, but the STR and the fact that it is a low loan amount and high LTV is probably on par. To me it all looks pretty standard.