All Forum Posts by: Hemanth Grandhige

Quote from @Arthur Schwartz:

you have the tools and financial acumen to do a series of what if scenarios.  change one variable at a time treating this as a single property.  vary down payment; ltv; and expected purchase price.  also consider sitting tight and using the cash flow to pay the current mortgages down to zero; you may find that you don't need a new purchase.  let us know what works! 

Arthur,  I did that exercise using Excel's Solver.  It found that a 27% down payment was the ideal scenario.  In my model I tied the rent to the purchase price (Rent = .008* Purchase Price) so i couldn't really test that variable much without some sort of data table. 

I'll try out your recommendation of paying them down to zero.  

Thanks for the response.

Quote from @Jacob Sherman:

Definitely want to do them individually to be able to access more cashout . Not only that but when you are in a portfolio loan and would like to for example sell one and break it out then most lenders will want to be paid back 120% of the balance attached to that piece of property back into the principle of the loan 

 Thanks for that detail.  I had an idea that my hands would be tied  if I did the portfolio loan but I wasn't exactly sure what the cost would be. 

H

Quote from @Erik Estrada:

 Hey Hemanth, 

You can structure this on a portfolio loan with partial releases allowed, as long as the portfolio can debt service at 1.00 with the total income and expenses from all properties remaining. 

It works well if the goal is to minimize closing costs and keep these properties in the long hall. 

 Hey Eric, 

That sounds better than the portfolio loan I was quoted but does it give me the flexibility in the future to sell one of the properties?  Or can I add new properties to the portfolio?  

Do you offer these kinds of portfolio loans?

Thanks,

Hemanth

I have 5 rentals in the Atlanta and Tampa area.  In total they are worth around 1.2M and I have debt on them around 260K. I have talked to a Loan Broker about doing a cash-out refi.  We first talked about a portfolio loan but he felt I could get more cash out if we did them individually. I also felt the flexibility of doing them individually could be worth it in the long run.  

The first round of numbers looks like I'll get about 493K in my hands after paying off the existing debt and all the origination fees and closing costs.   (These loans aren't cheap and so I am going to shop it around some more but let's assume this is the best I find.)  

I'm using my latest acquisition, the Tampa property, as a model for my new investments.  I can buy  5 more properties with 30% down and still have a decent bit left over for repairs and expenses.  

After running this model, my monthly positive cash-flow actually decreases from 5300 / month to 4125 / month primarily because I've added the debt on the existing houses.  I don't live off this cashflow so that alone doesn't bother me.  I'm just wondering if there is a way to optimize the amount of cash I pull out of the existing and the amount I put down into each new property to get the maximum cash flow and build equity.  Is there some sort of formula or rule of thumb to follow in a transaction like this?

I'm taking my debt level from 260K to 800K just on the 5 properties and then using that cash to put myself another 960K in debt.  I don't want to take that lightly without  thinking through all the scenarios. 

I appreciate any thoughts if you have done this kind of thing before. 

@Loretta C. - I pulled a rentometer.com report and looks like average rent is around $1675 for a 3 bedroom.  However the range is still pretty wide and the 80th percentile can go up to $2473.  Hope that's helpful.

I was wondering the exact same thing.  A google search brought me to this website: http://modularhomeowners.com/how-much-will-my-modu...

Clearly there are more costs involved than what the manufacturer is going to quote you.  Site work, permits, land costs, utility connections, etc.  I don't know if these are necessarily "hidden" costs... but they are probably additional to what you are quoted by the manufacturer.

@Juan Arias,  Did you end up pulling the trigger or moving forward on a pre-fab build?  If so, I'd love to know more.  I'm interested in doing the same as land can be found relatively cheap in my area. 

Thanks!

Did any of you pull the trigger and drop a prefab / modular home on a property as a rental?  I'd be interested in the costs and financials.  I have had the same idea as there are pretty cheap lots in my area and dropping a pretty standard ranch next to a whole bunch of other 1960's ranches would fit right in and rent at the same or better rates.  If there is a way to do this at a discount and have some instant equity I'd be all in. But this sounds too good to be true and there are likely tons of hidden costs to getting the house ready to live in.  

If anybody has actually done this I'd love to pick your brain on the details.  Thanks!

Hey Eric,  I've been looking at doing the same thing you described here.  I am looking for a more consistent deal pipeline and pre-foreclosures has piqued my interest. Any advice from your experience thus far would be greatly appreciated.  

Thanks!

I can only give you my experience with Sump Pumps and I am not an expert.  I have sump pumps in 3 of my properties and even in my own house.  I think they are great and do their job when installed correctly.  

I've had one installed for as little as 1200 bucks, all included.  That's here in Atlanta though.  I think the key is making sure to put the pump where the water willl collect or diverting the water to the pump so it does it's job correctly.  That additional work could push the price higher.

I don't have backups on any of my properties.  Actually I've never heard of having a backup  just for the sump pump.  Sounds logical but I haven't been bit yet for that reason. 

Does the electricity go out that often in that area?  Is the basement a living space or just a storage / unfinished space?

Hemanth

My lender is telling me that since I own more than 4 financed properties he can only refinance the purchase price of the home and not cash out my rehab expenses.  He seems to be knowledgeable and came recommended from here on BP so I'll take his word for it.  

I'm working on another deal right now. Purchasing a home for 45k cash and will probably have to put 22k into rehab before i can rent it out.  I want to refi this property as well.  He is telling me that I need to somehow roll the rehab expenses into the purchase price of the house.  I know how to do this if I was financing it. But how do I roll the rehab expenses into the purchase price if I'm buying it cash? 

Any ideas?  (I'd ask my lender but it appears he's not replying to email over the weekend. )

Thanks for the help.