All Forum Posts by: Doug McLeod

Could you Airbnb a portion of where you live now as a shared space?  With no track record, your extended family are your best bets for some startup funds. 

@Grace Esteban - any updates on what worked for getting your furnished unit rented? 

The cash out loans are conforming Fannie/Freddie loans so borrower must meet reserve requirements before final approval.  Borrower has 5+ financed properties and didn’t realize (and loan officer/broker didn’t catch until late) that reserve requirements are higher in that case. So short on the required reserves to close the refinance loans. (Cash proceeds from close does not count for qualifying for the loans - apparently.  What she did have toward reserve requirement was coming from 401k balance, so not really accessible. )
New property with construction loan requires some cash down. She was counting on the refinances to provide all of that cash. 

@Allan Smith

Thanks Allen. Can you recommend a HML in Tennessee? My friend is actually in Chattanooga.

A friend (really) is scheduled to close next week on a tear down property with a construction loan. She was relying on cash from conforming cash-out refinances of two other properties to provide down payment / construction lender minimum down. Refi lender “discovered” late that my friend needs higher reserves due to number of financed properties.

Biggest problem with delaying refinances is being unable to close on new property with NO finance contingency. No issue with current rates on existing loans.

What ideas do you have that we have not already thought of?

-Negotiate with seller - get out of contract vs. new terms to acquire property and buy time to get reserves for refi.

-Find a money partner to get into the new deal.

-Refinance the two properties with some other loan (commercial or even hard money) along with negotiating delayed close on new purchase.

@Matt Matessa - old thread, but doesn't look like you got an answer.  I split the mortgage to paydown (to the specific long term liability for the property - as subaccount under mortgages), interest expense, and a Mortgage Escrow account.  When I see the taxes and insurance paid on a mortgage statement, I do a journal entry to move the amount from Escrow to the property tax or insurance expense (or I do this at year end).  

@Christopher Freeman Since cap rate represents a risk premium it fluctuates by market, property type and class, demand, etc. Commercial mortgage brokers handling transactions in the area can give you an idea of the cap rates they are using to underwrite similar properties in the market.

In outlying areas those values correlate with age and build quality, but not necessarily higher crime.  Closer in it seems to depend on proximity to certain high traffic commercial areas that attract criminal activity and nearby apartments where tenants are not screened as well and security/visiting rules enforced.   

I have properties in that value range in 3 areas (previously 4) around town - mostly outside the Beltway. Not high crime, but still hard to find qualified tenants sometimes.  Screen carefully.  

I was searching for answers to some specific RE questions after buying my first SFR. The BP site showed up repeatedly with relevant threads from the forums or blogs.

If you have good W2 income, check out local education / mentoring / networking groups like Wealth Club, Lifestyles Unlimited, or RICH club. Join the one that seems to best fit your goals. They will help you start making those connections very easily.  Leverage your income advantage to save time.