All Forum Posts by: Frank B.

I've been thinking about starting a property management company but just to manage my own properties.  If it's a separate entity I could expense it and reduce my tax burden.   I'm just starting to think about this and see how to go about it or if it's even legal.  

I'm currently looking for my first rental property in the Sarasota/Bradenton (particularly Bradenton due to costs) area. I've been searching through the MLS for 2/2 or 3/2, 1100-1400 square foot properties in the $120-150K price range. What I seem to be finding is rental rates of about 1400-1600 a month for this type of property. This tends to create a Cash return of about 5-7%, and cash flow 150-200 a month. My question is: if you're getting your desired cash flow, who cares what your CoC or Cap rates are? Is it completely ridiculous to consider buying something like this? I've heard multiple versions of "criteria" involving similar requirements for SFH, which require cash flows of $100-200 a month on various podcasts and posts. So if this criteria is met, does it really matter what the return is on a SFH rental?

I just spoke to a broker in regards to a property and he stated that it needed to be an "All cash deal".

Aren't all deals basically all cash to the broker and seller, unless I am asking for seller financing.

What does it matter to them were it comes from?

Curious.....

so you are saying Zillow's zestimates & rent estimates are close enough to do an analysis?

 Those are all valid points, and polite disagreement is generally productive disagreement!

Re: "why not go with 15 year?" and "why pay it down early at all?"

• All the conventional wisdom on BP says "cash flow is king." This lets you pay it down aggressively, but at no point of your ownership will you be cash flow negative. I do see properties cash flow positive out-the-gate on 15 year fixed financing even here in the Bay Area, but it's fairly rare.
• Incidentally, if you plan on future acquisitions, anything that threatens your ability to qualify for future mortgages is a threat to your income and success. When we calculate DTI, we look at your minimum required payments and will not ding you for paying extra. If you're just getting started, calculated DTI (even if it's not "real" because you are paying extra) is critical, and 30 year fixed will make for a sexier calculated DTI. For established REI, DTI always takes care of itself and this isn't much of an issue. It's newbies starting out where 15 year fixed can hurt expansion ability.
• Next, and what I say will always be weighted towards what I know so forgive me if it's another mortgage thing, coming this summer PITI reserve requirements will change for REI. It will be based not on 6 months of PITI, but based on the outstanding mortgage balances and the number of financed properties you own (more properties = higher reserve requirement for all properties). Paying down mortgages early will grant you additional purchasing power even if your minimum required payment is not changing. So for an REI there will be a brand new opportunity cost, coming very soon, of maintaining perpetually high mortgage balances. Do you want to be ahead of guideline changes limiting your acquisition opportunities, or risk getting that "oh sorry Mr Smith it looks like guidelines changed, loan denied" phone call?
• I agree that some folks have insider knowledge on the stock market or elsewhere, and for them they should just look at mortgage rate v ROI in that other area of investment. No one is going to deny you the ability to buy a stock because of perpetually high mortgage balances. But see above if your goal is to continually expand your RE empire.
• Incidentally, bullet point #3 above means you should consider not applying OP advice equally to all mortgages across all properties. If you have five financed properties, instead of doing 1.0025 on each, do 1.0125 on one of them. Net effect will be the same,  but you're freeing up a Fannie Mae "number of financed properties" slot every 7-8 years instead of every 20 years. 
• And, finally,"how many mortgage free properties do you own and how much real estate equity do you have?" is not a crazy way to gauge wealth and proximity to financial freedom. There are certainly more aggressive, and more accurate ways, but this is not a crazy way if we just want to (for mah fellow former Marines out there) "Keep It Simple, Stupid."

I have a realtor ready to submit my offer on a property, and a buyer lined up. I need a free proof of funds letter as soon as possible. Can anyone help me with this or better give me referral? 

Hi creative real estate investors. I am trying to pursue the BRRRR strategy for both single family and a multifamily 4 plex here in Salem, Oregon, but am running into the refi issues. I'm wanting to pay cash for a property, fix up, but lenders are telling me they can only loan up to the initial purchase price (assuming it is only up to 70% apprased value), even if the appraisal comes in well over that. So I'm still left with cash in when the refi takes place. Has anyone successfully used this method and gotten their cash back? I'm all ears.

Do you have a lender that will work with you to get purchase AND rehab costs back at refi? Thanks.

@Erick Garske,

if you are within 6 months of purchase and own less than 10 residential properties you can utilize the delayed financing exception under Fannie Mae/Freddie Mac. These will allow you to use a traditional Fannie/Freddie mortgage with a 30 year fixed at 4.5-4.875%