All Forum Posts by: David Grabiner

What problems are you having with getting financing? What kind of financing are you trying to get? Are you trying to get funding for an LLC or in your name? @Jimmy Moncrief might be able give some insight into what will help you get a loan. 

You should probably finish and sell instead of wasting money on fees related to a cash out refinance. 

@Pat Marco That is an interesting strategy that I have not heard proposed before. It seems like it would provide great asset protection without having to set a up a new LLC for every property. However, how would it affect the ability to get more funding, or trying to refinance? are then any other negatives to using this strategy?

Basically when a lender looks at the property it will look like you have no equity and will probably be hesitant to lend more money. 

@David Zheng I know this is off topic but could you explain a couple of tactics of how you get higher rents then others in the same area? Not trying to hijack the thread or steal your secret sauce but I'm interested in hearing what you do and see if I can implement it in my area. 

So Is it a 2 bed 1 bath on both sides? If so then 600 per month is possible but it does depend some on the area. 

Just like Jimmy said this sounds like an East Lake deal. There are pros and cons to investing in those types of areas, I would suggest you weigh them carefully before you decide if that is where you want to invest. There are investors who love that area and don't mind the extra work, and lack of appreciation that comes with investing there because of the high income in comparison to purchase price.

Maybe some of those investors can chime in with their thoughts because it is not area that fits in my investing plan. When I first thought of investing and I didn't have much capital I looked at investing in that area not because I had a good plan as to why I should invest there but just because I didn't have much money so I thought I could start there. Looking back I'm glad I didn't start there because the amount of start up capital is just one piece to the puzzle and should not drive the entire investment strategy.

Is there a reason you need FHA funding? could you not just use a conventional loan with a low down payment?

I bought a fourplex with a conventional loan that needed a new roof. I got a quote from the roofer then made the offer stating 7K would be paid to said roofer at closing to pay for the roof, so essentially I wrapped that expense into the mortgage. I think this could work for you.

However, I think you should really check and see what repairs need to be done 114K for a 4plex with potential GMI of $3600 seems too good to be true. I would assume that it needs substantial repairs otherwise someone would have purchased it already.

Hi Ben, no I don't we haven't used hard money lenders yet. Just mortgages and we are about to do our first private money deal next week. Have you looked on the marketplace and contacted some of them listed there? 

@Joe Villeneuve In my example I stated the first property had already been sitting for a year so could be refinanced immediately, because I was discussing this as if it was for someone who had the properties and was deciding between refinancing and and your strategy. 

Do you not pay anyone to draw up the partnership agreements? 

No, my business partner walked through it a year ago and we decided to pass on it. We weren't ready to do all the work at that point so we didn't really do an in depth analysis. 

Ah, you are buying the Lake view properties those have been on the market for a while, rough shape too if I remember correctly. What is your rehab budget?

@Joe Villeneuve

True I didn't include closing costs, so are you saying setting up individual LLC's and creating partnership documents is free for you?

Also you made a slight error on your calculations under the Refinance section 

End Year 1 should be 9900 + (6300 - 1800 closing costs ) = $14,400 not $8100 as you listed. 

End year 2 = 9900+6300 + (6300-1800) = $20,700

End year 3= $27,000

End year 4= $33,300

End year 5 = $39,600

For a total of = $135,000 from 6 properties 

Your way gives a total of = $128,680 from 21! properties 

So even with closing costs added it it comes out a head assuming that you have no fees associated with your contracts and LLC creations. Plus you would have much less units to manage and be making more money. I agree you that your has several advantages as you have listed and I'm not trying to convince you to change how you do your business. I am really writing this so others who read it can see that your way requires you to have a lot more properties and doesn't necessarily provide more total cash flow in the first 5 yrs. If it was me and I could choose I would choose $135,000 from 6 properties over $128,680 from 21 properties.