All Forum Posts by: Ishviyan D.

Thank you everyone for your responses. Much clearer on this now. Saved the day. 

Hi. I purchased two properties in 2016 and am having a hard time understanding how to evaluate depreciation. My accountant said that depreciation will be against the value of the land, not the actual home. Is this true? Secondly, when I looked up the county tax assessor websites, I found that my Indianapolis property (which I purchased for $80,000) has a land value of $4,000. And my Kansas City property (also purchased for $80,000) has a land value of $12,000. Can the land values really be this low? And how can depreciating a $4,000 land value over 27.5 years even move the needle? Thank you. 

Jay Hinrichs and the most hilarious thing is that on his Morris Invest podcast, when he addressed the question about why people look down on 40k duplexes, he attributed it to people being elitist snobs who "stick their nose up in the air" and have negative perceptions about "blue collar" neighborhoods. I found such a silly rationale quite amusing to say the least. Staying away from war zones unless you have the tools to deal with the troubles is REI 101

Conventional loans are given typically to houses in "livable" condition. For a house that needs $40k in repairs, I'm wondering if a bank would finance the initial purchase of the house in the first place. And no, you cannot tie rehab money to a conventional loan as far as I know. 203k loans would work for such a purpose but they are only given to owner-occupied properties. Best bet would be to seek out alternate financing for the rehab money as well as the purchase if necessary (hard money, private money, etc).

If you do a standard 70% LTV cash out refinance, you should get back about $95,000 cash for you to reuse. The refinance is based on the ARV (after repair value). Hence 70% of $135k = $95k. You can then go use that $95k on another investment

I'd suggest you look in other states, either through turnkey properties or setting up your teams (contractors, agents, etc) in those states. NY is primarily an appreciation play, and it will be hard to cash flow based on market rents...especially considering how high prices have run. The sky high prices also create a barrier to entry for new investors. Other drawbacks of investing in NY are the unfriendly landlord laws and high taxes. As far as apartment buildings, I wouldn't jump into that game right off the bat. It's a different beast altogether and probably for a more seasoned investor...especially in a market as competitive as NYC. The only way for a newbie to break into the NY market and be someone successful in my opinion is to buy a duplex outside of the manhattan borough and house hack (i.e. Live in one unit and rent the other). Probably still will be hard to cash flow but may at least break even and give a newbie some solid landlord experience.

Jeremy Karja there are a few threads on BP talking about people's experiences with Morris invest and they have been less than stellar. As others have already mentioned, do your due diligence on their individual properties and rehab work. Some have commented on this company buying war zone type properties in questionable areas and doing poor rehab jobs.

Thank you Tatiana Gershanovich and Jeff Rabinowitz for the helpful information

My question is how fast can I refinance out of a hard money loan and what are my refinancing options? I'm guessing a cash out refinance wouldn't be applicable, but a term/rate refinance would? And if I understand it correctly, a term/rate refinance can be done as soon as one day after the property has been rehabbed. Is this accurate? Below is the scenario I'm looking at. I'd appreciate if anyone can poke holds in my assumptions since it's the first time I'd be using a HML: - Purchase price: $50k - Rehab: 30k - HML terms (100% of rehab: 90% of purchase): 12% interest; 3 points; other misc. fees. - HML: 75k - Rehab time: 6 weeks - Total HML cost: approx 4k - ARV: 100k I'm assuming I can do a term/rate refinance in week seven, even before the property is tenanted. I'm assuming that a term/rate refinance is done at 75% ARV, which means my HML loan of 75k will be paid off through replacement with a conventional loan. Total out of pocket based on the above= 5k (which is what I put in for purchasing the property) + 4k (HML cost) Anything I am missing or should look out for? Anything I got wrong above? Thank you!

Cliff Harrison what does the rate adjust to after the 5 year fixed timeframe is over?