All Forum Posts by: Jason Noah Choi

Hi BP fam, We've been dealing with some back and forth without being able to lock in a time for inspection with current tenants, so unfortunately, I lost my time slot with my guy. I'm in need of a trusted home Inspector to do the full works on a duplex in JC on this Sunday. Anyone know a person? Would greatly appreciate any recommendations.

Hey @Sunny Burns I was wondering if you can message me over your contact over at Trustco. I'd greatly appreciate it. Heard your podcast, you and your wife's experience was great to hear.

There's a great article on Investopedia that explains how interest rates affect property value which I've found to be generally helpful. I'm curious to hear about seasoned investors' experiences. I know lately, interest rates have generally been going down.

For example, are FHA loan borrowers probably going to be "underwater?" Case in point this scenario:

John buys a duplex using an FHA loan at 3.5% at 3.5% interest down for $100,000 in November 2016. In December, the feds raise the rates to 4.5%. In one year, John had been planning to refinance out of the FHA into a conventional loan in order to get out of PMI. It seems; however, if rates go up, and home values generally go down, a refinance can potentially not happen for quite some time. Am I correct in my understanding of this situation?

Any experiences or shares would be very helpful in our continuous planning to correctly buy.

@Eric P. Ah you're right, I was thinking of it only in the sense of refinancing right away and getting your 70-75% back to put into another property. It can totally be a longer term BRRRR.

@Account Closed disregard the all cash part of BRRRR I mentioned earlier. You can still do the BRRRR strategy even if you're using an FHA loan or conventional loan :)

@Account Closed Yeah the benefit is the leverage you will have by doing this. With an FHA, you may want to refinance in about a year or two if it appreciates well, this way you can get out of having to pay PMI which is brutal.

If you buy another investment property and decide not to live in it, you're usually going to be looking at 25% down in NJ if you're going the conventional route on multifamilies. If it's a 1 family, then you might want to look into the HomeStyle loan, which will lend on 15% down for investors.

Alternative methods can be to go ahead and do another FHA loan, if you're able to refinance out of your first property into a conventional mortgage and owner occupy the second one you purchase.

Or you can look into hard money or private lenders. There are a few that lend on 15% down. If you find a good enough deal, I'm sure you can implement the BRRR strategy and pay back the private lender.

Finally, you can also look for potential seller financing deals which means you'll likely have to be active in your search for off-market deals (mailers, friends of family/friends, etc). 

One thing to note, because there's so much competition in NJ right now, many sellers are not into waiting for an FHA underwriter to approve the mortgage, so you'll get lots of rejected offers. It would be easier if the house has been on the market for a while, and you offer a bit more than what others have been offering on the property in exchange for the potentially longer closing.

@Account Closed Are you looking to purchase using all cash? The buy-rehab-rent-refinance strategy only works when you're purchasing with cash. If this is your first purchase, I feel you should take advantage of the low interest rates (a smidge under 3.5%) that are currently available because the feds have been hinting that it will go up soon by going the conventional route. 

Additionally, there's always the FHA if you're planning to owner occupy it. Also, I've discovered recently that there is a company called SoFi that will give you a mortgage for up to a 2 family if you're owner occupying at 10% with no PMI. It follows most conventional loans in that it needs to be in move-in condition, so not sure how much of the rehab value you'll get out of it for the future refinance.

Ha definitely not someone I want to emulate. Just some random shower thoughts. 

We've had the age-old debate on whether it is better to hold your real estate in an LLC or just under your name. With the debate coming up, I had a shower thought of how he holds his real estate. Trump, itself, is definitely a corporation, but I'm curious how it all works out.

Now, if Jane owns multiple properties and continues to expand; at a certain point, it's possible that Jane will start a corporation to continue to build out her portfolio. Granted, Jane will also be taxed on the corporate level along with the tax on her W2. 

I've heard of individuals using a C-Corp to create a flipping business, but I haven't heard too much on the buy-and-hold front. Without getting into too much of the legality, is there anyone that holds multiple properties in a C-Corp? What benefits have you discovered compared to when you held them privately?

@Chin P. Yeah I agree, this is just becoming too inconvenient so I'm going to just use my initial dollar amount.

@Wayne Brooks You raise an excellent point that I had not considered and it totally makes sense. I had always figured I should put in a lower amount due to all of the counters that I've been receiving, but what you and Chin are saying makes a whole lot of sense. Thanks!

@Aaron Hurst Thanks for the reply. I've got a set dollar amount; however, for negotiation's sake, I'd prefer to have a preapproval letter that shows a much lower amount that hovers near my offer. 

I wonder if this really doesn't matter and I'm just giving myself more work.