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All Forum Posts by: J. Mitchell Bernier

J. Mitchell Bernier has started 24 posts and replied 262 times.

Post: Lowest Rates- what does it means?

J. Mitchell BernierPosted
  • Lender
  • Camilla, GA
  • Posts 271
  • Votes 246
Quote from @Matthew Kwan:

For those who are currently shopping or looking for a loan since rate cuts has been a hot topic. Keep in mind that rates does not fully translate everything. Please also make sure how much points or cost you are paying by looking at the Loan Estimate. I see some lenders out there would just pick the "lowest" rate and the client ends up paying more than 1% of the loan amount at their closing costs.

Key point is "Lowest" rate does not mean the cheapest rate

🙂

 I have worked in traditional community banking for over 7 years. I have only been pushed back once or twice on the loan/origination fee, but I get push back on the interest rate every single time. Take that for what you will. 

Real estate is the most proven asset class in the history of the world. That is true, but is it the best in this current environment? Maybe. If your time horizon is longer than 7 years, then I would say yes to real estate. If you are looking at 7 years or less, I would say that it's not the best investment out there. 

Also, Real estate is such a broad category that at any point in time, one section of real estate will be performing great while others will not. We can all see the issues with Office space right now, but during the 90's to 2000's it was an amazing asset. Residential has been a winner for a while now, but what's to say that demographics cause issues in 15 years, much like with China? So can real estate be the best investment out there, yes some of it can be, but then for others it will be the worse. 

The best investment for anyone is something they can easily understand and to sleep at night not worrying about it. For some that is real estate, others its bonds, others its stocks. For me, its real estate. 

Post: Valuing Equity over Cash Flow

J. Mitchell BernierPosted
  • Lender
  • Camilla, GA
  • Posts 271
  • Votes 246

@Jordan Blanton

Dont think there is a wrong answer. We personally have a mix, some are on 15yr, 20yr, and 30yr. Reason being is we have good w2 roles and were looking for minimum monthly cashflow and once we hit that we were happy to pay more towards the loan to build up equity. Plus, we use local banks so to get access to the equity is not hard if we need it. 

As a banker and investor, I have a hard time understanding why the extra little cash flow you get from the 30yr is better when your rate is 8% or higher. Any loan over 7% rate I want to pay down faster anyway. Paying down a loan at 7% is a better deal than stocking away the extra cash every month in an account earning 5%.... 

Post: out of state investor

J. Mitchell BernierPosted
  • Lender
  • Camilla, GA
  • Posts 271
  • Votes 246
Quote from @J. Mitchell Bernier:
Quote from @Erin Church:
Quote from @J. Mitchell Bernier:

@Stan Sugarman All things you said are true regarding demographics, but rent growth is attainable. We buy in Albany and from landlords who think this way and spend a little money and have been able to increase the rents every time. Now is it going to be astronomical, no, but the cash on cash return has been consistently above 20%.

Albany is a place where if you are smart, knowledgeable on the areas you buy in you can get great cash flow, but I would agree with you don’t plan for appreciation at all. Which we don’t


 Hey Mitchell,

Are you buying in Sylvester? Or how do you feel about that area in general? I have a connection with a wholesaler/investor that has a property under contract there with the option for sub-to and I'm trying to figure out if that's a solid area to invest. I wasn't sure if Sylvester was close enough to Albany to generally have its same characteristics from an investment perspective. 


 So personally, I don't invest in Sylvester. It is fairly close to Albany and prices are similar to Albany but will not reach the higher end that some Albany/lee county area properties can get too. Rent rates are about the same. Avg ranges from 700-1100 for decent areas. 

Hope that helps! 


 As for my thoughts about the area, it is a good community of with agriculture being its main industry. However; that also means you are not going to see major appreciation if any. So needs to purchase for the purpose of cash flow and it will grow with inflation. 

Post: out of state investor

J. Mitchell BernierPosted
  • Lender
  • Camilla, GA
  • Posts 271
  • Votes 246
Quote from @Erin Church:
Quote from @J. Mitchell Bernier:

@Stan Sugarman All things you said are true regarding demographics, but rent growth is attainable. We buy in Albany and from landlords who think this way and spend a little money and have been able to increase the rents every time. Now is it going to be astronomical, no, but the cash on cash return has been consistently above 20%.

Albany is a place where if you are smart, knowledgeable on the areas you buy in you can get great cash flow, but I would agree with you don’t plan for appreciation at all. Which we don’t


 Hey Mitchell,

Are you buying in Sylvester? Or how do you feel about that area in general? I have a connection with a wholesaler/investor that has a property under contract there with the option for sub-to and I'm trying to figure out if that's a solid area to invest. I wasn't sure if Sylvester was close enough to Albany to generally have its same characteristics from an investment perspective. 


 So personally, I don't invest in Sylvester. It is fairly close to Albany and prices are similar to Albany but will not reach the higher end that some Albany/lee county area properties can get too. Rent rates are about the same. Avg ranges from 700-1100 for decent areas. 

Hope that helps! 

We have let the property managers handle that for us and just let them know that rent is going up and that they need to sign a new 12-month lease. I wouldn't jump it up 20% immediately, but just bring it up over time personally. 

Post: HELOC on my Rental

J. Mitchell BernierPosted
  • Lender
  • Camilla, GA
  • Posts 271
  • Votes 246

We work with multiple small community banks and they have done this for us multiple times. Try some small local institutions and even credit unions. 

Quote from @Robin Simon:
Quote from @J. Mitchell Bernier:

@Nick Belsky and @Robin Simon are most of the loans rates starting to come down a little more with the movement in Treasuries? I know on the conventional/owner occ side it has, but was curious if the DSCR and non owner occ side is seeing similar things. Or doe these DSCR loans even mirror treasuries at all?

Thanks again! 


Yes, rates are coming down - FYI DSCR Loans generally are tied to the 5-Year Treasuries (vs. conventional thats generally tied to the 10-Year Treasuries)


 Interesting. What type of spread is common between the 5yr? 

@Nick Belsky and @Robin Simon are most of the loans rates starting to come down a little more with the movement in Treasuries? I know on the conventional/owner occ side it has, but was curious if the DSCR and non owner occ side is seeing similar things. Or doe these DSCR loans even mirror treasuries at all?

Thanks again! 

I may be wrong, but I don't think there was a law preventing this. I know some in my market have been offering them for a while now.