All Forum Posts by: Jim Scandola

Fairfield like most of Cypress is booming and a highly desirable place to live.  I believe that you will continue to see a high appreciation rates as this housing scarcity environment persists.  

Rental rates are also increasing but not as fast as appreciation. In time it will be harder to find cash flowing deals as a result unless you are able to locate off market properties that might need some rehab that keep you well below ARV.

I stick with my original thought as to whether keeping it or selling it matches best with what you are trying to accomplish for yourself.  Personally, I tend to be a buy and hold investor for cash flow.  However certain properties are worth selling in order to provide capital to grow your portfolio.  Another thing to consider would be a cash out refinance where you can keep the property, raise the rents closer to market and use the refi proceeds to buy another property.

The decision should be based on your strategy.  If you are investing for cash flow you might want to keep it.  On the other hand it sounds like you are looking for opportunities to grow your portfolio so thinking about how you can leverage your equity to do that is a good idea.  

You can also look at it from a return on equity standpoint.  Assuming you went conventional with 20% down when you purchased and yielding $175/month cashflow or $2,100/year gives you a ROE of 2100/35,200 or roughly 6%.  With the equity you have now the ROE is 2,100/100,000 or 2.1%.  The appreciation is tying up equity that could be leveraged for better returns elsewhere.

Regarding using 1031 here is the timing requirement:  

Measured from when the relinquished property closes, the Exchangor has 45 days to nominate (identify) potential replacement properties and 180 days to acquire the replacement property. The exchange is completed in 180 days, not 45 days plus 180 days.

45 days isn't a lot of time to identify potential replacement properties once you close on the sale.  If you decide to sell in this hot market perhaps you should find replacement properties first then sell since DOM is so short.  

Good luck!

I am also an investor in Houston!

I would approach this cautiously.  If the seller is not transparent enough to give you the information you need to conduct a reasonable evaluation that is a red flag.  You should also check the credentials of the agents you contacted and make sure that you are dealing with a commercial broker, not just a real estate agent.  

Never trust what they are telling you.  You can only trust the real numbers.  Real numbers come from those with local knowledge and when they cooperate to allow you to obtain them.

The terms that you describe sound likely to be a non-recourse loan but you should clarify with your lender.  If you want a longer than a 5 year term the interest rate is likely to increase.  

Is there an opportunity to add value by upgrading the units and increasing rents? If so, you might have the ability to refinance based on a higher future NOI and property value, pull out tax free cash to help recoup your original investment and continue to cash flow. I wouldn't count on this but it depends on the condition of the property, the demographics of where it is located, and overall market rents of the competition.

As Aubrey suggests, you should get some additional quotes from other lenders just to calibrate.     

Cortney,  My experience has been similar.  I have been on their email list for several months and the deals are very skinny after running the numbers.  You have to keep at though to find the diamond in the rough.  

As a buy and hold investor it seems that many of their properties are in neighborhoods I would not want to own in and the properties in the decent neighborhoods are highly sought after but the numbers don't add up in many cases.    

Well done Robert!  

Try Fund and Grow.  They offer business credit cards with 0% interest for up to 12 months.  The debt will obviously need to be paid back but it could be a more economical option over hard money loans.  https://www.fundandgrow.com/

I am interested!