All Forum Posts by: Franco Li

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I think finding the right spot is critical, but sometimes in your gut feeling you just have to do it! To fellow investors out there, I believe Samsung plans to move some operations to the East Coast. Definitely check on that and capitalize!

It's dependent on location of course! Since your questions a bit open ended, the best answer is: As much as you can!

While I applaud your ability to do this, it seems crazier to me that your credit history will not be impacted at all. Restructuring debt happens the most in bankruptcy and really that's no different than your situation - i.e. Paying off at a steep discount. If I were a lender, no offense, you would probably be the worst market for me and I would likely not give you another loan. On the other hand, you're a genius if you got away from this unscathed!

You want to refi- to get a cheaper mortgage on the property or to get some additional equity out? I would say to leave it alone because of refi costs. Think the initial decision on mortgage strategy is pretty crucial so refi- to get a cheaper mortgage after several months is pretty harmful. Best of luck, seems like the beginning of a great investment!

Hi there! If you can get a 30Y mortgage, thats probably your best strategy. I would also note the difference between getting a 30Y fixed and a 5 or 7Y ARM. Those will heavily (positively) impact your monthly cash flow, but I guess your interest rate view and risk appetite also comes into play!

Thanks @Mike Reynolds! I usually only focus on areas that I am comfortable with, and this is the only place where I was out of the loop in terms of market knowledge. Sometimes you just have to do it and see what happens! Best of luck with all your investments!

Two years ago I went to a small suburban town to visit some friends, who then complained to me about their exorbitant rents. Turns out an international company was the largest employer in the area and attracted a ton of fresh grads with subsidies for housing, which drove rental rates through the roof. 

Out of the blue, I decided to just check out some properties there and found a cape cod style semi-turnkey for $90K. I already had several investment properties in other locations but didn't know this area too well, but my math checked out, and I spoke with probably 5-8 property managers who gave me awesome and positive feedback. Since $90K for the house is really not a large investment (vs NYC) I decided, why not.

Within a week from closing I found tenants willing to pay $1,500/month for rent. 

Took out a mortgage, paid 20% down; total investment cost for me out of pocket was ~$20K (closing costs, legal fees, etc.) 

For you quantitative folks out there: 

11 months of cash (bc of you PMs) = $17,600 in revenue p.a.

-$2,000 in property taxes p.a.

-$500 for insurance p.a.

-$1,760 in annual PM fees

-$350/month on mortgage (-$4,200/year)

-----

Annual NOI = $9,140

Two Year NOI = $18,280

Cash-on-cash yield = $18,280 / $20,000 --> 91.40%

Best $20K i ever spent! In summary, if I can do it you can too. To all beginning investors out there, sometimes you just have to pull the trigger!

Interesting! So typically there is an expiration on your purchase agreement. If there isn't, then you can probably use the already past closing date as a cause for contract termination. Although, I wonder if there is explicit language on rights to termination - which is probably why your attorney is hesitant. 

Also, I say typically because in certain areas (NEW YORK CITY), sponsor sales do not have any expiration or any closing date target. This is also because sponsor sales might be longer than 3 months, and can drag on if they need to update the windows or get certain city certifications, etc. I've seen a couple folks get tangled in this and dragged on for 9-12 months. Good luck!