All Forum Posts by: Greg Pond

I like the advice of having cash reserves. I have also heard from other folks on Bigger Pockets that when buying in a rising market, then buy for cash flow and not appreciation. Nice short and sweet article - thanks for sharing.

Hi Mike, Hope all is well. I am a Denver real estate broker and investor. Would love to grab coffee or chat with you at some point. Take care, Greg

I don't know the market in Portland, but I agree with Scott. I think you hold onto it and make it a rental. I have a couple of questions before I make that statement. 1) What is the interest rate on your home? 2) How are rents in your area? 3) Does your property need updates and/or improvements? What are the finishes?

Thanks Steven Silva.

Originally posted by @Jean-francois Ndomb:

Great tip @Jared Bandel, I will be contacting my lender soon. But i am currently buying a 4 unit and looking to occupy one of them and qualifying for an FHA loan. He told me that he can definitely make it happen. But I will inquire about the multi family and see if i can get that instead. That would be great. Thanks for sharing guys, great tips and techniques, that i will be looking to explore. Good luck Jared. @Greg Pond do you put all your cash flow back onto your mortgages until they get to 20% typically and refinance?

 This is my second investment property so keep in mind I'm a newbie as well. I do not put all of the cash flow back into the property. I am a big fan of having cash reserves of about $10-$15k for unforeseen expenses and for future upgrades. Once the bank account for that specific property reaches $10-$15k I will then start to put the cash to work by paying down the mortgage. And, yes we will be refinancing to buy another one.

Thanks, Jill. I am loving the podcast and the website. Looking forward to it. Best of luck to you.

thanks!

Real estate broker with experience in commercial and residential brokerage. Fortunate to work with Fortune 500 companies on the sale of office and industrial property, as well as represent tenants on the leasing of office and commercial space. Currently, I am working with residential real estate investors, commercial clients, as well as traditional homebuyers and sellers. I am also a real estate investor. Love real estate and work in all facets of the business.

With respect to my investment property, we put 20% down, so no, we did not do FHA with FirstBank. It is in a 7/1 ARM now that we are going to refi next month into a 15-year. It won't cash flow much, but I don't really care as it is a long-term hold and the rents will eventually catch up to turn cash flow positive. If not, we have enough in cash reserves to carry it for 5-years. Also, I am happy to have the principal write down of almost $1000 per month. This is not a strategy that I would recommend, but did want to share this example with you. Anyway, we can chat more about that if you would like.

As far as FHA goes, it might be a good option for you to get into the property since you don't have 20% to put down. There is an option for you to pay the PMI up front so you wouldn't have to refi in the future. If you are going to hold on to the property for several years, then locking in at a low rate now will pay dividends in the future and the PMI has already been paid for. Basically, they are going to bake it into your rate.

I agree with you about the Denver market. As you know none of us have a crystal ball, but I feel like if you buy and hold, then over the long-term you should be fine. I am telling all of my clients to commit to holding on to a property you buy now for at least 5-10 years. And, commit that you will not sell the property in a down market. If you look back at the crash in 2007-08, people that sold then most likely lost their shirt. If they would have held on, they would be sitting pretty today.

Here is a link to an article I wrote that explains why I am still bullish on the rental market in Denver.

http://www.discoverhomesincolorado.com/blog/denver-real-estate-housing-market-snapshot/

This is what got me, "One of the reasons we are bullish on the housing market for real estate investors is a recent article from The Denver Post. In the article the journalist stated, “The state demography office estimates that Colorado gained 45,300 new households in 2015 but added only 25,000 new housing units. Since the 2007 recession, the states home builders and apartment developers have undershot household formations by 128,000.” The report also mentioned the Zillow rent index, which showed the average rent in Denver in November 2015 was up 9.7 percent to $1,952 per month. Denver ranked third in the rent index by Zillow, which was only behind San Francisco and Portland."

Hi Jared,

Sounds like a great idea. I assume that you are going to occupy one of the units, right? As you may already know, you will get a better rate and terms on your mortgage if you live in one of the units. Below is what a lender explained to me when I posed your question to him.

• They will need 15% or 25% of their own funds if they do not occupy one of the units.
  
  • With Fannie Mae the maximum loans are:
    
    • 2 unit = 85%
    • 3-4 unit = 75%
    • So investors need 15% or 25% down respectively.
• Now if they are primary residences, FHA may make the most sense, but you won't necessarily be able to do more than 1 FHA loan.
  
  • FHA max LTV's are:
    
    • 2 unit – 96.5% financing
    • 3-4 unit is also 96.5% but some additional requirements exist.

I would recommend talking to local banks as well. A local bank may have a better option for you. I financed my investment property with First Bank and they were very easy to work with and they portfolio some of their loans: 7/1 ARM, 15-year fixed. There are a ton of fabulous minds on BP that I'm sure will chime in with other great ideas. Hope this helps.