All Forum Posts by: Cristian Ramos

 First, you're not pulling your cash out in a refi.  If it was your money, you wouldn't be paying for it.  It's still the bank's money, and they are selling it to you as usual...just after the fact instead of upfront.

Second, when you refi you're still leaving money available in the property..the remaining equity.  Look at it this way, the value of the equity in any property isn't set at the face value of the equity...it's actually the value of the property.  Those two numbers represent a ratio of equity to PV.  The higher the ratio, the more valuable the equity is.  For example:  If you have a PV of $100k, and the equity is 20% (where most start at), the ratio is 1 to 5.  However, when that same property gains equity (appreciation and rent paydown) equal to 40% (mostly through appreciation), and the PV would then be around $120k, that ratio goes down (yes, down) to 1 to 3, and is then less valuable.

Third, while all this is happening, your rent in the original property (being refinanced) goes down.

Four, if you sold the property instead of refinancing it, that equity would go back to 1 to 5 and, you should be able to double your CF.

Cristian, I'm an investor and realtor in Wichita, KS.  The rental market is very strong here currently and I would agree with the aviation industry we are more resilient with market fluctuations.  What class of properties are you most interested in?  I personally own mostly B properties but lots of investors do well with C and D properties as well.

I see five trends:

1. Cameras are going to become still cheaper and more capable. In 10 years I suspect there isn't going to be such a thing as a multifamily rental property bigger than a duplex that doesn't have a camera system. The decrease in local street crime where cameras are means that true D-class areas are going to get smaller and marginal C-class areas are going to get larger.

2. Autonomous driving vehicles are going to essentially kill the need for garages and greatly expand taxi service and rideshare offerings. This will further redraw the C/D map in urban areas. At the same time, autonomous driving vehicles will also make longer commutes more comfortable. A 1-2 hour commute isn't going to be such a hassle if you can sleep, do your email, and study effectively while driving.

3. I have been working from home for 11 years now in my W-2. Although the pandemic increased the number of jobs that can be done remotely, there really is a natural limit to how many office jobs can be turned into work-from-home opportunities. I don't see radical change coming on that front.

4. In our new age of the greatly increased power of the automated background check and ever-growing computerized databases, owning  and operating rental properties has become much safer than it used to be. This has led to a huge influx of people buying rental properties as investments, especially large business concerns doing it as a form of alternative investment. This will continue.

5. Landlords have never been more hated. By and large, the influx mentioned in (4) above is the main reason for this. The political backlash has begun and will continue to develop. More restrictions on evictions, collections, more county and municipal inspections, more moratoriums are on the way. In some places, these are very obviously going to backfire and either rent will be untouchable or landlords will simply sell and get out en masse, creating acute housing crises in the affected areas.  That's when the trend will quietly reverse, as politicians realize they can't continue to effectively use and abuse the poor for political gain without keeping landlording profitable and keeping the rent down by creating landlord-favorable policies.

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One major thing that could disrupt or take advantage of these trends is cheap modular multifamily construction to replace our ever-decaying residential construction housing stock. This could be achieved through onsite 3-D printing of components, drone labor to assemble the multifamily building, major NGO investment in these technologies. I don't see this happening in 10 years. Maybe 20-30.

I don't see much else, @Steve K.

LOL  MBA training causes over-thinking.  

Valuation of single family, including duplexes, triplexes and quads is ONLY determined by comps. Valuation in commercial property is determined by Cap Rate and NOI.

Discount cash flows to your hearts content.  Making offers on that math will result in paying too much or never buying a property.