All Forum Posts by: Rick L.

 Can you explain?

 Can you explain?

I paid 81k cash, put about 25k in remodeling into it.  It appriased for 125k

My mortgage broker and I dropped the ball. I'm WAS in the process of performing a cash out refinance on my 4th investment property that I purchased about six weeks ago. I just finished remodeling the place utilizing my HELOC. I've had a credit report pulled, and even received an appraisal.

However, during the underwriting process it was revealed that I'm required to own the property for at least 6 months (NOT 6 WEEKS) in order to perform a cash out refinance.  Does anyone have any suggestions to get this deal done?!?

@Account Closed I appreciate your reply. However, most large residential multifamily financing available is either a ARM or Balloon with 15/20/25 year amortization schedule. Although, fixed rate financing would be ideal, it's simply not common place when dealing with larger properties.

My main concern is how to compare investment returns when crunching numbers based on ARM's or Balloons vs. fixed rate mortgages. For instance, if I choose to proceed with a 5/1 or 7/1 ARM at a 20 year amortization on a 1 million dollar 12 unit property. How does this type of debt service compare to if I were to acquire the same property with a 20 yr fixed rate mortgage?

If I'm able to achieve the same investment metrics (IRR, CoC return, ROI, etc) is it like comparing "apples to apples" or more like "apples to oranges" since it's with different financing?

I'm transitioning from perusing small residential multifamily properties (2-4 units) and SFH's to larger 10+ unit properties. It's been easy to compare deals since the financing has been strictly conventional fixed rate mortgages. However, how do I compare a large multifamily deal, where financing is being offers as ARM or Balloons VS. the conventional fixed rate mortgage deals I have in the past???

How do I make sure I'm achieving similar investment returns with such different financing options? ARM/Balloon vs Fixed Rate Mortgages???

Thanks for your response @Robert Sepulveda I believe that's what I encountered with cash-out refinance financing. Would it be possible to attain conventional fixed rate mortgages on investment SFH & 1-4 family multifamily properties that are not livable? -ie, they may require mild to moderate rehabs? Or is my only option to acquire the properties....rehab and then perform the cash out refinance?

In the past I utilized an FHA loan to purchase my first investment property which is a 4-family I also live in. My most recent acquisitions have both been duplexes that I acquired using a HELOC and funding minor/moderate rehabs to update the duplexes making them rent ready. I then performed cash-out refinances to pay off the HELOC loans and lock the properties into a low fixed rate mortgage.

The difficulty was, in my own personal experience, doing cash-out refinances is more expensive and the rates are much higher than conventional financing.  So, I'm wondering if there is another strategy to utilize moving forward to acquire a property that may need moderate rehabilitation using financing???

Thanks for your responses guys. I just completed a drive-by evaluation of the property and immediate surrounding neighborhood.  I spoke to several neighbors in the area.  The place was nice and well maintained.  However, the surrounding neighborhood was not the area I wish to invest.  In fact, I was subdivision was even more economically depressed than what I initially had believed.  Based on my evaluation I'm no longer interested perusing this property.

An investing pearl I've learned is to always walk the immediate neighborhoods.  Speak with residents to get a "feel" for the area and insight into the status of the area.  It could save you from a big headache down the road, like I believe I just did.

@Matt Inman good to hear from you!  Hope you're doing well!

I have the opportunity to purchase an off market 6 family building in the metro East suburban area of St. Louis (Not East St. Louis).  The seller has stated they're wanting to free up cash to pay for their daughter's college education.  I haven't asked to verify any of the financials YET, however based on what the seller has initially disclosed the property looks like a great deal if the numbers are accurate.

Asking Price: $220,000

Gross Rental Income:  $3450

• Two 1bd Units
• Four 2bd Units

Insurance:     $1500 (seems low)

Taxes:           $4000

Utilities:         $330/month (Water, Sewer, Trash)

Property built in 1970.

Seller purchased property in 2013.

Property located in transitional area/lower income area, but low crime area

Property located within mile of High School and elementary school.

New Roof 2013

4 of 6 Units have been remodeled (pictures look very nice)

Stacked Washer & Dryers supplied in units

I would appreciate your opinions!