All Forum Posts by: Steve Wilmers

Hi Ashley - which town/city is the “central Michigan” house located in?

@Greg Weik

Interesting, could you elaborate on why that is?What is it about the single families that you prefer over the multi? Is this more of a focus on property appreciation?

@Joe Villeneuve

Fair enough, and good point. The $60k I was referring to would be the actual proceeds I would actually have on hand if we were to sell. I used that number as the theoretical investment on a keep vs sell because I figured that was the best way to approach.

In the past you’ve offered some great insight and a different perspective on similar posts so I appreciate your thoughts there. Thanks!

@Joe Villeneuve in its simplest form, would you invest $60k into a rental for cash flow of $150 a month?

Great question @Nick Symon, and thanks for bringing this up as I'm in a similar (but not quite as awesome) situation.  Kudos to you on the position you're in!  Our primary residence has a decent amount of equity in it currently, and we are moving soon, but considering keeping the current house as a rental.  

I'm running into the roadblock of a low theoretical "Cash on Cash" return, even though the property cash flows taking into repairs/capex reserves, 1 month a year vacancy, property management, etc. While there would be ~$80k in equity left in the property once we draw on the HELOC to pull the down payment for the next house, after taking into account the above vacancy/reserve items the projected cash flow is ~$150/month. I consider the "cash" for this portion at roughly $60k, since if we sold the house there would be $15-20k in commissions and closing costs deducted from that equity ($80k, as mentioned above).

@Joe Villeneuve - You mentioned that as long as the property is positively cash flowing, it sounds like it's a go.  Do you take into account the amount of equity in the house required to hold on here, or from your perspective is that irrelevant?

@Greg Weik - Good point on the property manager.  On the building equity note and future expansion, would you sell a single family residence now and continue to save for a 3-4 unit?  Thinking long term, if we were to grow a rental portfolio this seems to be a more efficient method.

Hopefully an insurance expert can comment on this as I am not one, but I would be very surprised if your cash value is increasing close to dollar for dollar on the amount you're paying in via monthly premiums.  I am curious though if this is accurate.  In order to get that "almost dollar for dollar" do they require a significant up front payment on any or all of the whole life policies?

Jumping back on and just realized I never hit "post" on this message......

Hey thanks @Evan DeVisser!  Do you have the address of the property?  If it’s in an area of interest then yes I would appreciate the introduction, but depending on the municipality it’s located in it may not be worth starting the conversation. For example, I’m familiar with the new City of GR rules with this type of construction, just not certain suburbs. 

Look into a self-directed IRA. This is dependent on how much you have in that 401k account because you'll need to pay cash for the investment property, as you likely won't be able to get financing in your personal name for an asset that's held in the IRA.

Hi @Clay Couvillon - Is this in some type of retirement account (401k/IRA) or simply a general taxable investing account?

Hi @John Lutkenhoff,

I doubt you'll find many lenders willing to go below 20-25% on a down payment for a small portfolio/project especially as many lenders that I've talked to have started to re-think how they are structuring new deals with the current environment.

One method I've seen used in the past to lower a required down payment, although not specifically with a portfolio loan, is to set a chunk of money aside in a CD (certificate of deposit) that the bank/CU holds for a few years until you've proven the ability to repay the loan.  This only helps if you have additional liquidity on hand, and simply don't want it locked up as equity in the portfolio for the next 5+ years, as the lender may be willing to release the CD requirement in 2-3 years.

I understand that customer service can be a concern with picking a bank, but just remember that if you don't plan on making adjustments or modifications to the loan, simple real estate loans may only require limited contact for a few years as long as you're making your payments and aren't asking for additional funds.

Best of luck!