All Forum Posts by: Jason Flint

Thanks for the comments.  I definitely agree, and think it goes without saying, that if one can refinance without paying Closing costs, that would always be the route to take.  I am guessing most investors have had the same experience as me that a no closing costs refinance is rare and difficult to find.  I also agree that paying the Freddie Mac fee to lower the rate is not always, or even most of the time, the best route to take.  I do respectfully disagree that it's rarely a good idea to pay the fee if you are in accumulation mode.  I am definitely still in accumulation mode and took that into consideration before I refinanced our properties  My main 2 points in that line of thinking is #1. Property values have gone through the roof in the past 3 or 4 years.  Now, with our economy in turmoil and with so much uncertainty in our country's future, it seems highly unlikely our properties would appreciate enough in the next few years to consider refinancing again to take equity out.  #2.  Through the cash out refinances we just completed, our monthly cashflow more than tripled.....If a property popped up next year that we just couldn't pass up, our additional monthly cashflow would more than cover the 20 to 25% down payment.  Again, I certainly agree that paying the Freddie Mac fee should not be regular practice, but I definitely would not dismiss it just because I was in accumulation mode.  

@Jason FlintThank you. Was it a 80% or 75% LTV refi?

@Jason Flint you asked how our approach has changed.

That's good stuff man.  I hope you post results from time to time with your evolved strategy as I am definitely open to following your lead with that strategy. 

@Jason Flint welcome to BP. Your approach to buying SFR properties sounds exactly like ours was up until several months ago. To your question about these 5 homes. I'm getting mixed messages from your comments.

At first, you sounded very leery due to the deferred maintenance.  I would be too.  You know this, but there's a difference in buying at a discount due to value-add opportunities and buying at a discount due to deferred maintenance.  In adding value, we do the things renters are willing to pay for (updated kitchens, egress in the basement for another bedroom, etc).  Deferred maintenance (e.g. roofs) are things renters already expect (table stakes) and are unwilling to pay for.

Then you sound like it's not really a big deal.  The current renters move out, you do some painting, replace floor coverings, tune up HVAC, etc, raise the rents, and new renters move in.  No big deal.

What really is the concern here?

@Jason Flint, have you considered making one or more of these houses vacation rentals? If they're in a good area it might be prime location and if you're willing to put the work in they might cash flow CONSIDERABLY higher as vacation rental, for the right area and the right size some people will pay top dollar. Take a look at Airbnb and Homeaway in your area and look what similar houses are charging, especially the ones with a lot of good reviews. I'm doing very well in an area that people are "surprised" that people come to stay (suburbs north of Detroit) thinking that it's strictly a quiet neighborhood with nothing going on but people have 100 reasons to travel and some are not so obvious. I'm looking right now for one near Downtown Detroit and even though I want a "deal" I would consider something that might be borderline good or barely not qualify for a regular rental because I know the demand for short term stays near downtown is crazy. 

 How do you know what the market value is if you have not thoroughly inspected inside?

We will definitely thoroughly inspect insides of homes before we sign purchase agreements, but all the homes will be appraised by our bank we are using for financing......and we will pay 75% of that appraised value......so this deal will not be based on our estimated market value of the homes.