All Forum Posts by: Jeff B.

 You must separate your personal and rental business finances.  In some states, deposits must be in an interest bearing account. 

All of your categories are BUDGETING and there is more than one way to create and control a budget.  I deposit all tenant deposits into the business.savings account.  Rents go to the business.checking.  This covers ONE or MANY rentals.

A conventional loan will not, but then you're already barking up the wrong tree - - the MFU5+ needs commercial financing. I bought my 6-plex back in '97 and sold it in the spring of '16 this way. It was operational then and yielded a cash flow to me and by making improvements over time, I forced appreciation on the 6-plex and sold a cash flow to my buyer. BTW: the GRM was 11.5 and his CAP was 6.5. Overall, I gained %200+ on the MFU approach.

 ONLY for fixed term loans.  All ARMs adjust periodically (quarter, 6 mo, annual) with a new rate and payments based upon the current balance.  These are prima-facie for MFU 5+ commercial property

Refi to extract equity is the FIRST step in selling the property.

Refi to 70% of value and bank the proceeds of this loan.  Now put the property up for sale. Upon COE, all existing loans will be paid in the settlement and the net sale proceeds will be lowered by the last refi.  

The taxes due on the sale have been reduce, saving money and yet you now hold

1. the net proceeds of the sale
2. PLUS the proceeds of the  refi

I use Hangouts also..

My 6-plex is the ONLY mfu in the area with lockable garages.  Most only have a storage cabinet in the car port.  Over the years, they have been used as extra storage space instead of off-site public storage unit.  I COULD easily get an extra $100-$150 for them, but instead I use them as a marketing advantage to draw tenants.

When there are two or more vacancy signs on the street, I seem to rent mine first ...

For all ARM loans, any payment to principle reduces the outstanding balance and when the arm adjustment occurs, the scheduled payment usually decreases (assuming no interest rate change). Thus the cash flow really does improve, but that depends upon just how much principle reduction has occurred.

There's all kinds of investment strategies and theories and YOU get to pick yours :grin:

Building equity to reduce payments is like depositing into a long term CD.  The return occurs when you sell at an appreciated value.  The roi on this is dependent upon the appreciation and NOT the Fed or local CD rates.  Is this the { Best, Good } choice - - that's up to you!

Don't be bullied buy (in Allen Greenspan's words) excessive exuberance so often found on BP.

Copeland has it right.  The '50% rule' is a conservative benchmark and ok for estimates, but when you make an offer and require the Approval of PnL & two years Sche-E you will get the truth.  This is when you tell if the property is falling down or well run.  We use the contingency to escape when necessary.

Personally, my 6-plex ran at a 35% expense rate for years.

2008 was a struggle filling vacancies; got lots of below par applicants and I allowed vacancies to continue rather than take these.  While there was a mortgage, the MFU 6-plex floated on w/o red ink as the break-even point was two concurrent V.  Rent adjustments were not considered.

Minimize property taxes is a good starting point.

Minimize the number of buildings - - goes to maintenance efforts/expenses

Require rent-rolls and sch-e as contingencies on every offer to verify Actual Rents and Expenses.

Forget price/unit; it's just an easy number the bean counters can cal, but doesn't bring any real useful info to the decision