All Forum Posts by: David Emerson

Hi BP Community,

Looking for recommendations for CPA's that are experienced/specialize in working with real estate investors and/or small business owners. I am in Providence, RI, but the CPA does not necessarily need to be local. Any recommendations are greatly appreciated!

 Thanks Mike!!

 Hi Joe, I think we're on different pages here, sorry about that. What I'm saying is not that I plan on sitting out based on 5.5% alone. My question revolved around the ability to get multiple pre-approvals in order to see if there was a 4.75% - 5.25% rate still in my area now. Because who wouldn't prefer a 5% rate over a 5.5% rate today if they can get it, right! If 5.5% is the going rate everywhere in my area then I will take what I can get, but you don't get the answers to questions you don't ask.

@Steve Vaughan, @Scott Johnson, @Brian Salazar, and @Salvatore Lentini thank you all for your insight and providing some extra detail! And apologies to anyone who was interpreting this as the end-all-be-all of whether a couple percentage points would keep someone in or out of a market. 

@Steve Vaughan Thanks for the insight!

 Hi @Tim Herman, yes I look at things two ways. Either 1) rates move higher from here and re-trace later in 2023/2024 at which point a re-finance is always an option, or 2) rates move higher and stay high, in which case at least I've locked in a rate that's substantially better than market rates. Part of my work is in fixed income asset management, so I spend a great deal of time fixating on our interest rate environment. 

My question was more about can I get multiple pre-qualifying offers without continuous hard inquiries/negative hits to my credit? I've seen rates as low as 4.5% today. I know these things are very regionalized, but at 5.5% currently I can't help but think there is a 4.75% / 5% rate in my area from another qualified lender. Because if rates move higher and stay higher than that would be a great advantage. I just don't want to go through the work of doing that if it's going to do more harm than good. 

Does that make sense?

Hey BP Community! I recently got a pre-approval back from a great mortgage lender but was a bit sticker shocked when it came back at 5.50%. I know rates have moved quick over the past few months and can vary amongst regions, but to go from 3.5% in late December to where it's at now is crazy to me. And I know they'll be moving higher from here.

With that said, I was told from a couple of people there's a certain period of time after you apply for a pre-approval where you can go and apply for other pre-approvals without the temporary negative hit to your credit from a hard inquiry. Is that true? If so, what's the length of time you can do that? I've heard 2 weeks and 1 month, from completely different sources. 

For extra context, I'm looking in the Southern MA area; 02601 zip code if we're being specific. 

I would like to keep the potential future business with the current mortgage lender, but if there is a large enough discrepancy in rates I may want to consider placing it elsewhere. I'm just trying to avoid too many negative hits to the credit if possible (not that I have bad credit, I just fixate on it like a nut job).

Thanks!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Providence.

Purchase price: $390,000
Cash invested: $22,000

My first purchase was a house hack of a side-by-side duplex. I'm renting out the neighboring unit, as well as one bedroom of the owner-occupied unit.

What made you interested in investing in this type of deal?

Living and working in Boston I grew tired of paying crazy rents, and that's even with having lived on the outskirts of the city. When COVID hit and I realized work-from-home was here to stay, I realized I didn't necessarily had to live in Boston. I grew up in southern MA, went to school in RI, and spent all 4 of my college years working in Providence. Providence seemed to make sense from a commuting, proximity to family, and cash flow standpoint.

How did you find this deal and how did you negotiate it?

I worked with a killer agent who kept my up-to-date on listings he felt met my criteria, as well as gave me feedback on additional listings I was pulling from Zillow and Realtor.com. After a couple of declined offers, and one sale-to-be gone wrong, I ended up closing on this deal thanks to an escalation clause along with offering appraisal gap coverage. I came in a bit short of the top offer, but the seller liked the additional security potential from the appraisal gap coverage.

How did you finance this deal?

FHA 3.5% down

How did you add value to the deal?

The property is a newer build for the area, and I looked at it as a turn-key that isn't in need of any immediate repairs. I'll be living in the owner-occupied unit that's in excellent shape, and I inherited some great tenants who have been there long term, pay fair rents, and are completely content in their unit that will eventually need some updating whenever they do move out.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My agent, lender, inspector, and attorney were all great to work with. They were more than happy to answer all of my beginner questions and collaborated amongst themselves to make the entire process, from offer being placed to meeting at the closing table, seamless.

@Adam Czajkowski nice work on breaking into the STR space! I love the detail on your post as well, super helpful. I purchased a multi-family as a primary residence in RI about two months ago, and I recently started looking at Newport / Cape Cod (primarily Hyannis) for a STR opportunity. Would love to connect some time to get some more color on how your journey is going!

Agreed - that's where you need to start shopping for carriers. Some carrier's products are designed to be more advantageous for the short pay designs and others are designed for the level-pay for life designs. The products and charge structures change so frequently that no one carrier will ever be the best selection for a particular approach for long. However, most individuals looking to optimize the funding (and all premium financed scenarios) take the approach of 10-pay, 7-pay, or 5-pay. It becomes a question of how can this individual maximize the amount of funding in a contract without overfunding it to the extent that the IRS no longer recognizes this as an insurance product.