All Forum Posts by: Dan H.

@Brent Coombs my recent refinance resulted in me having only two investment properties with any of  my initial investment.  One did not have enough equity and the other the interest rate was so much better than current rate that I chose not to refinance.  

I would have taken out all the equity they permitted without loan rate artificial increase because it would allow me to best leverage my investment. If I could have gotten same terms on 95% LTV I would have taken 95%. However 75% LTV was the number that provided that best rate.

So I have one property that is still a good candidate for an ELOC. Due to appreciation its LTV is ~50% but its rate is over 1% less than current rates and I do not need the cash bad enough to want that type of rate increase. So ELOC would be a good choice for being able to access the equity if I needed to but not lose current great loan. However I have not yet started recent research (I remember some of what I found out last time I looked into ELOC but for example do not remember exact lenders that did ELOC on investment properties (there were not many)).

I looked into ELOCs on investment properties a year or so ago and found there were some, but not many, that offered them (I do not know if anything has changed since then). My properties are in different price range (I invest in So Cal) but most ELOC would go to only 70% LTV. ELOC are after purchase. I ended up refinancing instead and therefore did not pursue the ELOCs. @Brent Coombs you are correct that the ELOCs I found back then were not asking what the money from the ELOC was to be used for.  

With current interest rates being low, refinancing is a viable option for taking money out of investment properties. You can also typically get a little better LTV amounts than with the ELOC (typically 75% but sometimes 80% with competitive rates).

I have one investment property with quite a bit of equity with loan rate significantly better than what I can get today.  So I may look into ELOCs again for this one property.  

@Michael Reyes Escondido multiplexes (2 to 4 units) is our expertise. You can still obtain multiplexes in Escondido with positive cash flow accounting for all expenses (and I use what many people consider to be high cap expense numbers: $300/month for SFR standard rental size, $250/month for attached standard rental size).

Some advice: 1) Do not use listing prices as a comp for Escondido multiplexes (only look at sold prices - do not think it is a deal just because it is listed lower than other listings) 2) Do not forget cap expenses in calculations 3) higher density areas usually result in more work than lower density areas 4) South Escondido is trending in much better direction than North Escondido 5) even in Escondido finding SFRs that have positive cash flow is not easy 6) Tenants in certain areas value having adequate parking 7) Lourdes is not close to as good as it was last year, it is no longer clearly the best Mexican food :=).

Good luck

I am not a tax accountant but I suggest you immediately apply for an extension if you have not.   Seeing that it is past April 15 I believe that penalties may be unavoidable but possibly applying for an extension will avoid further penalties.  Regardless there will likely be interest charged until you pay if you owe.

My tax accountant is Miles Lawrence.  You should be able to find him in the yellow pages or on-line.  He is not cheap; in fact he is likely on the high to very high price range but he has done our taxes for a while and we have a few complications.   Depending on the complexity of your tax bill a less expensive tax accountant may suffice.  I trust Miles and if I could change anything it would only be his rate :=).  So I do recommend him but warn that his rate is high (possibly very high).

Good luck

@Darren Crawford Are you thinking of this as charity?  When adding in cap expense, maintenance, and vacancies both are likely to have negative cash flow and there is no equity.   The only way this works is if you are thinking of it as you are willing to donate money to help her out because that is what you would be doing.

I think she will be lucky to be able to sell it for what she owes to a local investor who can self manage.  If she sold at less than she owes it could be worth it as managing/owning rental property takes time; it is not the same as investing in a mutual fund.   If she sold each at 5% below market it might be best option for her (and I still think that may be challenging).

If you could find a 70% rule property in San Diego that would be a home run.  I have seen 2 that other investors purchased recently that likely qualify.  Both had BP open houses.  

One had title issues that took a lot of leg work to resolve.  It was purchased for ~$125K and was going to sell for close to ~$400K but do not know what was spent on rehab but it was a little 2 BR/1 BA property.  So I would think the rehab was probably $40K-$50K.

The other has much larger pockets but it was mis-classified as a historic property.  When classification was removed and when shared cost with neighbor on a retaining wall that was a huge expense it end up being a home run.  The purchaser was unaware at time of purchase that the house was moved to that property and the historic property was erroneous.  @Justin R. was part of the BP open house.

I do not do flips but know the San Diego market pretty well.  I would not look at the 70% rule as a prerequisite as there are just too few but I would have a prerequisite that the flip should project $100K profit otherwise it is too risky (I would make an exception if you have a lot of experience with flips then maybe it can be worth the risk at a little less than $100K projected profit).

BTW we do a fair amount of rehabs on our buy n holds and we virtually always underestimate the rehab cost.  Unexpected expenses should be expected.

Hope this helps.

1. Increased rent (seems county wide)

2. In my market (Escondido multiplexes) less properties available at "correct" price (less inventory).  Those priced "correctly" are selling fast.

3. Price increase seems to have slowed over the previous few years in my market.

I suggest you research cap expenses and cash flow on BP.  I invest in San Diego county and unfortunately believe your property as described above is negative cash flow after including cap expense, vacancy, and maintenance.  

Does this imply that it is a poor investment?  Possibly not but you are relying on appreciation to do well on this investment.  Fortunately San Diego has done well in the appreciation area.  

I do have a little experience on having property in Germany but not enough to make a recommendation either for or against investing there.  I no longer have property in Germany but my situation was different than your situation (i.e. I was not living in Germany). 

If you invest in San Diego I suggest using a cap expense cost of $300/month for SFR. Allocate 10% for vacancy and maintenance. Finding a property that cash flows with these numbers in San Diego likely eliminates SFR and requires multiplexes. If you can handle some negative cash flow you can invest in SFR in San Diego in hopes of appreciation but if you are not in San Diego I question why San Diego.

I invest here because I live here and can manage the properties.   I have done well investing here and am pro So Cal investing but if I did not live here I probably would invest elsewhere.  

Good luck.  

 @Aaron Mazzrillo I'm very pro CA investing but I find it a lot of work to find properties at such deals that they can whole sale with large returns.  You may have the network in place, etc but there are not many people succeeding at it like you are.  There is no need to be so harsh on those working hard to make decent money on volume of whole sales outside CA.     Note 10 deals at $2-$6k month is $20-$60k a month.  That is a lot of money (even in So Cal or San Fransisco) that would reflect hard work.  Note that amount of money outside So Cal would go further than in So Cal making the standard of living it could provide even higher.  

@Michael Tran with the goals you have stated I recommend the book land lording on auto pilot or something close to that. I believe the author experienced harsh consequences of the 2008 crash as he was investing in Detroit but it does not imply that the information in the book is not helpful.  It is loaded with interesting tips many targeted at reducing the amount of time it takes to manage buy n hold properties.  

Here is an example nugget: never refer to yourself as the owner but as the property manager. It allows you to delay answering any questions until further time and minimizes the discussion/debate as well as provides opportunity to think about all ramifications (I need to check with the owners or my partners- whatever wording you want). 

He has recommendations on ways to minimize time between tenants including flooring choices, paint selection (minimize colors used on your units), etc.  

good luck