All Forum Posts by: Jeff Kobernus

Thank you for the responses.  I will speak to my agent and make sure I have the necessary coverage, would rather be overprotected.  Thanks! @Will Barnard @Eric M. @Jeremy Goodrich @Kyle J.

As long as you have access to cash/reserves you'll be fine. I am currently using my HELOC for a property and should be closing in ten days.

Food for the thought.  When the market start taking a dip the buyer will then say "is this the bottom?" or should I wait another year. Impossible to predict numbers and location don't lie. You can still buy a crappy deal if the market takes a dip.  If you're going to hold the property for 15-20 years its not going to end up mattering in my opinion. 

If cashflow isn't the most important thing in your life, personally I would refi to pull enough cash to purchase another property IF AND ONLY IF you thought there were decent to be had.  Cashflow is a great but if you don't necessarily need it currently to live and feel comfortable with reserves I would try to find another property.  The reality is it depends on your goals.  If you wanted to have two properties paid off and getting a higher monthly net, then keep chipping away at the mortgage.  Your goals seem to be more in line with growing.  Only way to grow is to acquire more.  The sooner you get a few more properties, the sooner they will be getting paid off.  Equity is great but if you can't access it or aren't selling the property then its just sitting in there like a savings account.

It was my understanding you would have to refi out but I'm sure this is dependent upon the type of loan.  May want to speak to a couple different brokers to get their opinion and maybe they will compete for a no cost refi.  

Hi Lee,

Here is something to think about.  How long do you intend to keep the property?  0-5 year or 6-10 or longer?  If you are 0-5 my only concern is getting my money back. Doesn't have to be perfect I need to break even at a bare minimum because its short term.

If I am 6-10 or longer I am not as concerned regarding some of those numbers. Your paying down debt, if you get a modest small appreciation over the course of 10-15 years it won't matter.  You are taking on a higher interest rate than normal BUT the reality is you can refinance out of that loan as soon as you have the minimum requirements to do so with a lender.  So your short term high interest loan shouldn't be a huge factor AS LONG as you are comfortable with the payments.

Heres a phrase to have your agent ask the selling side on the property (THIS IS DEPENDENT ON HOW MANY DAYS ON MARKET) "Good evening Mr. Seller we were inquiring about so and so property and my clients love the property.  We have identified two but this is our top choice but our budget is closer to $120k is that something even worth submitting in writing in your opinion?  Let the agent speak and they will give you all the information you need.  Seller in my experience is not dropping $30k. Potentially 5-10 MAYBE 15.  Anything else will be highly unlikely.  Start with that conversation. IF THEY SAY DON'T WASTE YOUR TIME then my next question is.  "Okay thank you for the information.  If I could push him up to $125k and I don't think he would do it, but do you think that is something your seller would entertain?"  IF he denies it then you know $125k is not the bottom.  Always better to submit and offer WHEN NO ONE ELSE IS NEGOTIATING with a tight response time.

None the less, I did a guess on your mortgage with 7% interest property taxes insurance ect and Im getting $1100. Thats solid in my opinion.  Your mortgage with rent is now $500 or less. When you refi your payment would likely drop below 900.

Thank you for the insight. I will keep shopping around a little bit, but good to know that the premiums are higher than usual.

Good evening Bigger Pockets. I am in escrow on a property in Sacramento that is off market and due to close in about 2 weeks. Most of all my real estate has been buy and hold.  This property in particular I am debating what I want to do do with it.  I may flip it, I may keep it as a long term rental or I may end up using it as a second home and then renting it full time down the road.

What are the flippers doing insurance wise?  I have am getting financing putting 25% so having my insurance squared away will be required.  If I end up flipping it what kind of insurance policies are you guys getting?  I was quoted 3k for annual insurance since it will be "VACANT."  This insurance agent has done about 5 of my properties and a ton of my clients.

Is insurance really the much more because its vacant for 3 months?  My remodel is about $75k and 8-10 week job.  Depending how it comes out and how much I end up spending will determine what I end up doing with it.

Any help ?? Thanks

Isn't the California rent control law in place state wide?

I wouldn't consider that being $10k in the hole.  Many times in a competitive situation I will write a contract stating buyer is purchasing the property at $500k.  Buyer willing to pay up to $15k over appraisal price with a cash of $500k.

Meaning if the property appraisers at $485k or higher they are paying $500k.  It protects the buyer so they know they have a max out of pocket of $15k.  This is done when buyer can't totally waive an appraisal.

If it appraises at $470k they are paying $485k.  Appraisals are opinion of value.  You can have 3 different appraisers appraise a property and I will guarantee they will all be different prices.

THE REALITY is it depends on the deal.  Sometimes the deal has great cash flow, or is in a great area or a buyer really wants a property and they are willing to pay over an appraised value to get it.  Just depends on what you see as the potential.  IF you think your going to hold the property for 15-20 years and it produces great income will $10k be the difference of a good or bad deal?  Your discretion.

What if the property appraised for $145k what would it mean? the answer is NOTHING doesn't mean you can sell it for $145k doesn't mean you can refi and pull that $15k out.  Maybe I am misunderstanding the question but I see this come up when a house has multiple buyers involved.