All Forum Posts by: David McMahon
David McMahon has started 1 posts and replied 4 times.
Post: Strategies for this rate environment with no (current) W2 income
- Los Gatos, CA
- Posts 4
- Votes 0
Quote from @Doug Smith:
You're correct. I was misquoted a calculated rate I saw. So yeah, with that DSCR is still a 1-1.5% rate premium.
I'll have to just be on the lookout for deals where all the numbers work.
Speaking of which I've got a fairly comprehensive sheet that does all the calculations, but I'd like to contrast/compare if there are other spreadsheets around in the community. Any pointers?
Post: Strategies for this rate environment with no (current) W2 income
- Los Gatos, CA
- Posts 4
- Votes 0
Quote from @Doug Smith:
Rates in general are much higher than there were a year ago and they spiked again this afternoon. The spike in the 10-year Treasury has pushed even 30-year fixed rates for owner occupied residential properties into the upper 6%'s. That puts DSCRs into the upper 7%s to Low 8%s, which pushes the DSCR itself down to, in many cases, sub 1.0X. Clients are really having to put more down to get them to cash flow. Is there a better option? Not really. Even if you had a steady income, Fannie and Freddie have jacked up pricing on non-owner-occupied deals. Now is the time where investors have to dig and bird-dog. There's a lot of money to be made...it's just not as easy as it was 24 months ago.
Thanks, yes. Not what I wanted to hear, but at least you confirmed what I'm also finding. I'm getting DSCR quotes over 9% in some markets (local lenders), which seems crazy given my credit score and assets. I'm guessing there are some sweet deals from lenders, but I'm just trying to figure out how to find them.
I suppose it's just a matter of keeping my ears and eyes open here and elsewhere to find the right team/pipeline including lenders who are willing to work with me.
The good news is, If I cut my teeth in this environment, it should be really smooth sailing down the road.
Post: Strategies for this rate environment with no (current) W2 income
- Los Gatos, CA
- Posts 4
- Votes 0
Quote from @Taylor L.:
Where are you sourcing deals to evaluate? The MLS or off market?
Looking at new construction, non-MLS. I certainly understand that new construction is going to be on the thinner side of cash flow, but i'm less comfortable dipping my toes into out-of-state deals on properties that need work/maintenance. Or I haven't found the right pipeline (and team) for those types of deals.
Post: Strategies for this rate environment with no (current) W2 income
- Los Gatos, CA
- Posts 4
- Votes 0
Looking at several out-of-state regions to find the right mix of cash flow, CoC, stability and growth potential. Aren't we all?
Given my situation however, I'm finding it near impossible to find any deals structured in a way that would provide a reasonable cash flow or CoC return, even in areas of good price to rent ratios.
I've been steadily employed for decades, have a 810+ credit score and enough cash to buy at least two mid-west properties outright.
At the moment I'm between W2 jobs and enjoying the time to look into investment options finally, but this also means DTI won't work so DSCR is the only(?) option and those rates and down payment requirements are sky high making most things I find cash flow negative.
Has anyone else broken into real estate investing in a similar situation? What is/was your strategy? Maybe the current rate environment simply makes this a non-starter, but I figured inflation lifts rents too which might offset some of the increased lending costs. Not so much.