All Forum Posts by: Evan Ernst

Bedstuy

additionally amit, you mention that your friend has 2 and that he needs to leverage further. I'm so leveraged at the moment personally that I don't think a bank will touch me for a while. You're suggesting that as I pay down equity, my debt decreases and despite a constant income, banks eill begin to look more favorably at loaning me money for another property? Or are you suggesting i can take out against the equity for a commercial loan or something? I'm still trying to wrap my head around the two types and how to utilize the equity I build.

so even though it's only a two family, in a neighborhood with a bery active upward trend, you're suggesting it's still very worth it to simply maintain and hold the property and utilize increasing rents plus developing equity which I can leverage against without actually refinancing that building in particular? That makes sense. I guess it then comes down to is it worth dropping my interest rate from 4.125 to 3.625 percent and refinancing 30yr fixed to 30yr fixed? It will take roughly two uears to pay back, but if I decide to stay with a long term hold, then the lower rate should pay dividends in the long run and make it easier every year to drive the additional cash flow back into the property for repairs and maintenance. I'm currently only at $5k postivie cashflow year on the property and the refi would bump me to $8,300 roughly which seems safer.

Thanks a bunch. Super helpful.

I do want to hold long term, but I'm wondering if as a 2 family I should maximize the appreciation from neighborhood improvement for the next 7-10 years and then sell to use the cash (saving on the personal tax exclusion), and put it towards a larger project or a 3+ family. But maybe even as a fully rented 2 family it's still worth holding onto long term? i'm also trying to understand when I should take more money out against it to get another project off the ground or if I should keep the mortgages all separate and pertinent only to the building they involve. I'm too leveraged for additional personal loans so maybe I am overcomplicating this and the additional cash out won't even matter because a bank won't lend for a third property at my debt to income ratio.

I'm looking for some advice on refinancing. I have a $661k loan on a 2 family property in Brooklyn that I planned on holding for 5-10 years (what I expect will maximize the growth of the neighborhood and value of the property). I did a 30yr fixed a year and a half ago for 4.125%. With the rates down to about 3.625% for the same loan, I could refinance and pay off the cost in about 2 years and then pocket an extra $3,300 a year on the property. A lender, however, is suggesting that a 7yr arm for a 30 loan would be far more valuable. It would certainly save a lot of money (around $9-10k a year I think), but my concern is getting stuck in a high interest rate market and being unable to sell.  Is it worth the risk? He suggests people refinance an awful lot, and as an investor, my next question would be will I want to refinance in a year or teo anyway to pull out more cash on the increasing value of the building to invest it elsewhere like a new property? I'd like to learn more about the art of refinancing, what vehicles are better and how to play the game. I am mainly looking to acquire buy and hold properties for equity and some cashflow with more cashflow down the line. The 2 family seemed a good place to start but eventually I assume I will want to be in the 3 family or above market for the sake of additional rent rolls. I'd love to learn more if anyone can point me in the right direction.

Thanks for all the feedback everybody.  It's been extremely helpful.  One thing that I just ran up against is that the building is zoned as a 3 family and shows up as such in multiple capacities (DOB and Finance) but when the CofO search was done, it was converted to a 2 family in 1910.  There is no CofO.  I was under the impression that this would cause me a lot of problems if I want to rent it as a 3 family and install a kitchen etc in one of the floors.  Is this the case?  How much would this really cost and how much time would it really take?  Is this a reason to drop the deal?

Thanks for responding guys. Apparently the vacancy rate for the area is 1.76% so I rounded to 2. It's definitely possible to lose a month from a screw up or a bad situation in which case it would hurt. I currently have the rent rates at the bare minimum of 2300 for the bottom 1br with large backyard, 2100 for the middle 1br, and 2000 for the top 1br. But technically, all the new development condos in the area are priced way higher which should push lower pricepoint minded people my way. And once going, I could probably get closer to 22-2400 for most of the apartments. Which numbers should I be focusing on, the coc? Total roi? I'm not really sure which to use as a minimum % I should hit to decide whether to move forward. And the fact that it might be 200k lower than fair market value, does that justify it if I'm looking at this for a buy and hold?

Hi Guys, I have an accepted offer on an off market townhouse in Clinton Hill Brooklyn. I'm brand new to all off this and although I think it's a good deal, it's still hard to get the numbers to look decent. Any advice would be greatly appreciated. it's a 2 family zoned as a 3 family which would only require light renovation and a kitchen install to bring it back to 3. 1.3k purchase price, I'm bumping to 1.32 and asking for a $20k seller concession to help cover closing costs (not reflected in spreadsheet). avg sqft price of neighborhood is between $650-$750 so at $540 it seems like it would be a good deal. Broker suggests it would probably sell open market for 1.65 and comps like appropriate but I just don't know. But looking at the spreadsheet below, the ROI is only 7% and the cash ROI less than 3%. I'm looking to buy and hold to develop equity and eventually have it as a cash flow property or something I can move up with in a like kind exchange, but I can't tell if this makes sense as such or if I should be trying to find something else. I kept my numbers really conservative. appreciation will probably be closer to 5% each year, and the rents in the area are between $2,000-$2,500 so I might be on the lower side for the units but I figured I would need to get things started and then could clean things up a bit over the years. Any thoughts? Maybe these numbers are actually good and I just don't know it. Sorry if this is a silly post, but I'm really trying to make heads or tails of this so I can move forward confidently or bail if it's stupid.

Hi everybody, 

I live in the New York City area and I'm just getting started with trying to immerse myself in real estate investing. I've been reading and podcasting voraciously, and trying to learn everything I can as quickly as possible. I just bought my first house this year and am trying to find my next.  I'm definitely open to speaking with anyone who might help shed some light on this particular market.

I look forward to exploring Bigger Pockets further.

Evan