All Forum Posts by: Shaun Carl

I currently invest in C neighborhoods because of the higher returns, BUT, there are good reasons for doing so.

I bought the near worst properties in these neighborhoods and made them close to the best properties. 

I also use a very experienced PM that also invests in these properties. His experience along with the returns (30-40% when buying right) make up for the difference you may get when factoring in the increase in turnover and repairs. After everything I am still getting 20-25% COC, but can now purchase more property. Again, I only do this because I have a experienced PM on my team. If it was just me, then it would be much different probably. I like to be hands off as much as possible on the day to day stuff, so I would save longer and go for A property.

Wow, Thanks @David Oldenburg !

Yeah we wouldn't be pulling out the cash if we didn't have a better return in the works. 

We are looking to possibly buy another property and then use the rest for some low end flips or just focus on flipping for a bit to build some cash reserves. We have someone that usually would take these deals but is strapped for cash because of a huge deal he is in the middle of and we would like to take these for some quick cash. He usually generates ~40% return on these at about 1 every 1-2 months. 

The bank mentioned that the 10 year term/20 year amort. would have the lower monthly payment. He usually would offer only a 15 yr depending on the amount, but wanted to preserve as much cash flow as possible for us. The 5 year must not be set for 20 year amort. then. 

At the end of the 10 years, the bank said we could look to refi again if needed. 

He seems to want to help us grow and be profitable. Thanks for helping to explain. 

Thanks @Jon Klaus  and @Patrick Britton 

I assumed they were higher because of this. They are a smaller local bank as I tried with a larger one already. Wasn't sure if these rates seemed high or normal right now. 

If this was the only way I could go, which seems like the best option? The rate for the 5 seems much lower. I would assume we could pay it off in 5 years if we needed to, or is it always good to just go ahead with the longer term. 

Also, I cannot tell if option 1 is also set at 20 year amortization or 10 year. Help? I would just like to keep the payments as low per month as possible. We are planning to take the cash out and do some flipping with it. 

Thanks guys!

So we are about to Cash-out refi two of our rental properties in a blanket loan. We hold both of these in an S- Corp and have had them for a little over a year. We paid cash for them. All in about 110k total. They are both 4 units. They still need to be appraised, but I am assuming they will appraise for about 150k.

Rates seemed a bit high. Not sure if this is because it will be through the S-Corp and they are commercial.

Which option would be the best and why?

LTV: 70% of appraised value

Option1: A fixed rate of interest of 5.25% for the first five years. Standard Rate Call Provision to apply to years six through ten.

Option 2: A fixed rate for ten years 6.25%

Term of Loan: 10 years

Amortization: 20 years

Thanks!

So we are about to Cash-out refi two of our rental properties in a blanket loan. We hold both of these in an S- Corp and have had them for a little over a year. We paid cash for them. All in about 110k total. They are both 4 units. They still need to be appraised, but I am assuming they will appraise for about 150k.

Rates seemed a bit high. Not sure if this is because it will be through the S-Corp and they are commercial. 

Which option would be the best and why?

LTV: 70% of appraised value

Option1: A fixed rate of interest of 5.25% for the first five years. Standard Rate Call Provision to apply to years six through ten.

Option 2: A fixed rate for ten years 6.25%

Term of Loan: 10 years

Amortization: 20 years

Thanks!

I invest in lower income properties, but I also have a great property manager that also invests in these areas and has been dealing with it for years. If you are new and doing this on your own, I would be very careful. You can get great deals and returns if you stay on top of things and have a great team in place. 

Hey Connor, 

Nice to see some more Buffalo investors. Do you know what the ARV is on this place? If you are living there, why do yo need 20% down? Is it because it needs a new roof? You should be able to get away with a lot less down if owner occupied. Depending on the area, the numbers look good, but I did not see any numbers for maintenance/repairs in there. I know you will be living there, but you should account for those also.

Also you stated 14000 down with 10000 for roof and 4000 for closing, that would be 28000 and not 24000 invested. 

Depending on area, it looks like a decent deal for Buffalo. 

IMO, I would wait till you have more properties before starting an LLC or S-Corp. I have a partner, so we started an S-Corp and there are lots of fees with running one, vs just having it in your own name and an umbrella policy to cover. An LLC might be cheaper than an S-Corp. You would still get taxed the same either way, as all profits (or losses) just flow down to your income.

Also, if you purchase in your own name, then you can use normal financing with a lot lower down payment. I believe if the property is purchased in an LLC, they would need the 20%-25% down rather than 3.5% or so. I know some banks require the LLC to be in operation with good financials for a year or longer also.

This is all just from my experience though. 

I enjoy looking for different ways to make money and become financially free. I own stocks and have traded all different types. Dabbled with FOREX trading and commodities. I even now have an account with Prosper just to see how that works and if I can make anything with that. The main reason why I liked REI is because Land will always be there and people will always need a place to live. A company can go bankrupt, and many things influence the price of oil and gold and silver, people can default on loans, but I can always drive to one of my properties and walk around.

I really enjoy the searching or hunting for that next great deal. 

If you only have 18 months left on the loan, then most of the payment is towards principle anyways, and you are not saving much by paying off early. I am in the same boat. I would put the money towards a property.