All Forum Posts by: Cody Cook

Leo M Christensen lots of variables to consider since I don't know the market you are in. Personally, I would probably cash-out re-if and continue to rent the property. This allows you take advantage of the low interest rates and lock them in long term. There are a couple assumptions that are necessary to support this strategy. 1. You can still cash flow the property with a 70 to 80% LTV refinanced loan 2. You feel the the condo is an attractive rental long term for your market 3. You feel the market is over all solid (meaning there could be more room to appreciate or even if the market dips in the near term, you would be confident that it would bounce back in the long term) I have a couple properties like this that are locked into favorable long term rates. I'm hesitant to sell because they cash flow easily and I feel they are in great locations for the long term. If the market collapses, I'll still be able to rent these properties and they are located in areas that would appreciate once the market improves down the line (if/when it drops). However, you should always consider if there is somewhere else I can put my capital that could get me a better return.

@Omar Shahid I do agree with @Ralph R.'s approach as well. I just don't know your numbers well enough to see if it's possible to re-finance and then feel comfortable with covering the mortgage with your rent rate. If the market does drop, you've put yourself in higher pressure situation. It's all about risk management. The Denver market has been on fire for some time, but it has been supported buy job growth and transients moving to the city. In Austin, I plan to move every two years into rentable properties and then move out and buy another. This allows me to get the best mortgage rates and put less down while accumulating properties that can appreciate (hopefully). 

Does your new house have potential as a rental property? Why not live in there for 2 years and then by another one in the same area to move into?

@Omar Shahid I'm in a similar situation with a condo in Austin. I understand other folks recommendations for cash-out refinancing; however, since you no longer live in the property the rate you get will be worse than what you currently have the mortgage on. Additionally, your mortgage payment will go up with the re-financing (assuming you cash out re-fi up to 75 or 80%) and it will make it harder to cash flow. Personally, I've decided to keep my property as is because I believe in the market in Austin for the next two years. I can continue to cash flow the property with ease now, and then make the final decision of whether or not I want to sell before the option for my primary tax exemption expires (i.e. having to live in the house as your primary residence in 2 of the previous 5 years).

In my case, I'm in a highly rentable location, so if I decide not to sell in 2 years while utilizing my primary tax exemption, it will probably be because rent has gone up and I can still cash flow with ease with a higher monthly payment. If that's the case, I may choose to cash-out re-fi and hold the property even longer term. It will also depend on how the market looks in two years. 

I know my answer is specific to my condo vs. the Aurora area, just sharing what my thought process would be when evaluating the decision. Austin is similar to Denver in that I would not be able to find a property that could cash flow like my current one.

@David Ivy Great info, thanks!

This is a great thread. Thanks all for the ideas!

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@Mike F. I do agree with @Mindy Jensen though. If you aren't experienced, this isn't how I would suggest to start out. 

@Mike F.

I'm based out of Texas and I've made offers on properties sight unseen in other cities in Texas and in Colorado. I often do it in Texas by making an offer mid-week with the intent to travel to see the property over the weekend. I schedule the inspection for the following Monday so that it happens within the option period (the number I often see is $100 for a 7 day option), but after I've seen the property in person. This gives me the opportunity to avoid paying for the inspection if I don't like the house, and only sacrifice the option money. 

I think it makes sense because it saves me from travelling to the property, seeing the house and liking it, but failing to get an offer accepted at the price I'm looking for. I'd prefer to have the offer accepted, and risk the option money if I don't like what I see.

When I've done this for Colorado, I was willing to buy it sight unseen because I worked with an agent that I really trusted. I wouldn't necessarily recommend this, but I think there are cases where it can make sense. I did view the property before closing, but at that point I was risking my earnest money as well if I decided to back out.

I do agree with others that this definitely isn't the ideal approach, and you should focus on your backyard if possible and at the minimum you really need to know the market you are going into and have trusted professionals to rely on.

@Account Closed 

Thanks for the response. This is great information!

@Jamison Haussman Thanks for the feedback. Do you mind sharing what your modeled numbers are on the 4plex? Primarily, purchase cost, expected rent and COC return. Just trying to get a feel for the market.

I'll let you know if I find a good management company.