All Forum Posts by: JD Barrera

Thanks Kenneth and Brad! 

@Brad S. - I bought these at the beginning of 2020, turn-key style... so backing on the appreciation that has occurred to get my valuation higher than purchase time. I'm assuming that will also be a factor, correct? 

Hi all...  I'm in the middle of a cash-out refinance on two properties. We are in the appraisal process and the appraiser reached out to me and asked, "were the properties renovated before or after you purchased them?" 

Am I obligated to disclose this? I feel like the current value of the property should not be relevant to when the rehab occurred. These were renovated before purchase so I feel like this can only hurt my appraisal. Has anyone encountered this before? Thanks!

Seems like an easy questions, but can't seem to find it on the forums already....

For an out-of-state rental I'd like to purchase with conventional financing, do I need to find a mortgage broker in the state the rental is in or can I use a broker in my home state? 

I was wondering how conventional loans work when in a partnership. My partner and I both have good paying W2 jobs so theoretically, we should be able to get 20x (10x each) conventional loans. However, talking with a loan officer in the area, he said that if both my partner and I are on the title of the property then a loan would we be taken out in both our names and count against both of us (thus limiting the 20x down to 10x).

I have heard on podcasts of partners each utilizing there maximum allowed conventional loans. How do you all do this? Does one partner put the title + loan under his/her name and the partnership agreement state this is 50/50 (or whatever the split)?  

Eric, I just acquired my first rental property with my partner back in April and have had it rented out for about two months now. I currently have $2k in reserve for it that I plan to build up to $10k (note this is just my half). I'm going to build it by applying all my portion of the cash flow from the property until my reserve hits $10k. Once this is done, then all the cash flow will be reinvested to more rental properties. When I need to dip in to the reserve in the future, I'll simply do the same thing (apply all immediate cash flow to reserves) to build back up to $10k. Note that we paid all cash and are self-managing so the cash flow it pretty high such that building to $10k should not take very long. 

Right now, the reserve funds are just in a savings account. In the future, I may leave half in the savings account (for immediate access) and put the other half in a lower-liquidity vehicle like short-term CDs or treasury bonds with the reasoning that the likelihood of needing all the reserves at once is probably low so might as well have some of it earning interest. 

Evan, I only have one rental to date in my portfolio, so take my advice for what it is... I adverted it before 100% finished (still need to add gutters and do landscaping) and it worked out for me. I found the tenants were much more interested in what was inside the house than outside. 

I'd put it up and see what type of interest it is getting. If you find multiple people interested at the rent you are shooting for then you know it did really matter. If interest is low then you can alway wait to re-adverstise next month with renovations finished and see if things change.

Rylan, Option 2 the turn-key seems pretty optimistic. I have not invested in any turn-key properties, however my understanding was that you sacrifice some ROI in paying for the "turn-key" convenience. This has the highest ROI by a long shot. That being said, I don't know the area or context very well so it could be a great option.

The Option 1 an 3 seem great and if you have the time to tackle both (or all three) then go for it. 

Have you thought of doing a purchase in all cash? I ask because it seems like you have the funds for it and it would decrease the risk (assuming a market crash in the near future) and increase your cash flow, albeit decreasing your short-term purchase power. 

Hey Jennifer, as Ben mentioned... a lot of this is going to depend on your personal goals. 

To give you an idea to help you form yours, here is what I do currently based on the location and the types of property I try to invest in:

I look at is the cash-on-cash (CoC) ROI. This is basically (income - all expenses)/(total price point invested). A good way to look at CoC ROI is, its the equivalent of the annual dividend return when purchasing a stock. I shoot for a 7% CoC ROI (or dividend). Then, assuming the home value appreciates with inflation (3%) the total return with be 7% CoC ROI + 3% appreciation = 10%. Any additional appreciation due to market changes will be "icing on the cake".

So I don't really look at a fixed number for CoC ROI. I maybe $10k into a property and have cash flow of $58/month or $40k into a property and have a cash flow of $233 and both situations are ok for me since I'm getting the same return on my money.

@Chris Low.. thats exactly what I was thinking: phone calls about lost or not working remotes. Thanks for the comment. 

@Jassem A. Those or an equivalent are what I'll likely use as a replacement. 

Great advice! Thanks everyone. I'm going to install the ceiling fans of my preference while I live in the home. When I convert it to a rental, I'll take them down for light fixtures, so long as comparable rentals don't have ceiling fans.