All Forum Posts by: Account Closed

Hey Whit!

Before even getting into this, why are you trying to get as much equity out? Do you have a property in mind that requires a higher amount down? Are you just planning to hold the cash anticipating a market decline?

Just thinking out loud, but if you want to invest in something else, just take the equity out and look for an investment opportunity in the range of your downpayment of $60k-ish.

Or keep the house and turn it into a rental and just buy another primary residence (with FHA 3.5% down). If you do a cashout as well, you could maybe buy a 3rd property.

Or, if you just want to hold on to cash and wait for the market to drop, i’d just do a cashout and capitalize on long term, low rates to grow your portfolio now...assuming you want to invest more.

Hi Stephan,

Congratulations on taking the first steps towards purchasing a property! My two cents would be look for a deal and be picky about what you want to look for (SFR or MF). Don't worry about what the market is doing to start investing. Let the deal and what you want to invest in guide you.

Do you want a value-add / fixer upper? Turnkey? SF or MF? Decide the type of investment you want and then zero in on finding a deal that makes financial sense.

Whatever you decide to do, I wouldn’t wait for the market to potentially ‘get better’; especially if you find a great deal.

Good luck! 

Where is it located? If it’s in good condition and good location, I’ve seen well over $100,000/unit. 

Maybe ask a realtor you know or a company you might trust to pull comps? 

Hi Ryan.

I’m in somewhat the same position but with only 2 paid of duplexes in Phx. And was figuring out what my next move is with a potential dip coming.

In my opinion, if you are buying more properties for long term cashflow purposes, just make sure you get a deal and buy where you know. Arizona is a great market and any dip you see won’t be like 2007. Plus with a dip, (it’s just my opinion) the rental rates won’t be going down and neither will the tenant pool.

My plan is to pull money out up to about 50-60% LTV because rates have dropped, and look for other small multifamily deals. Be patient and if the market dips before the portfolio is full, use that remaining equity to by ‘discounted' properties.

As long as you have decent equity and you’re looking to hold long term, you’ll be fine so you might as well stick to where you know.

No matter what you decide-good luck!!

@Dhanush Kondoth Hi Dhanush, First off, best of luck with this deal! I think the banks are more prepared this go around with a market correction so it will be difficult to compare last recession with an impending correction today. My opinion is: As long as you have equity and have a relationship with the bank, you should be fine when looking to refinance. Of course this is all predicated on you having equity after you’re done. If you do have good occupancy, payment history, and equity, any bank would most likely be happy to refinance with you.

@Tomika Rogers Congrats and good luck!

I am looking to acquire more properties despite my belief that we are heading towards a mild ‘correction’ in the market.

What I’m doing is hedging this hunch by keeping LTVs around 50%...while still purchasing properties.

Is that leaving potential borrowed money on the table —yes.  Is it also securing that if there is a correction I won’t be over leveraged — yes.

I’ve been going back and forth on this because I don’t expect a drop in the rental market rates and vacancy.  Since my properties are all long term holds, why should this stop me from pulling more money out of my existing portfolio to buy more units?

In the end, I guess it’s more comfort level for me.  I think being able to be more picky on deals knowing I only have smaller/more limited funds to reinvest keeps me focused on really analyzing all the numbers to make sure it’s not a good deal, but rather a great deal.

My little theory could work two fold because if values drop say 10%, i will still have some equity to pull from in order to by cheaper/better deals. The buyer pool, in theory, will be smaller too which allows for better deals to be found.

Anway, there you go. This, in my opinion, is a good middle of the road outlook on how to invest heading into a potential correction: lower your LTVs but keep buying.  

Hey Alan,

I agree with what others are saying re: getting a realtor. The trick is to find a realtor who specializes in REI properties vs. owner occupied home specialists.

You can actually start out through Zillow, Trulia, etc. in looking for investment properties, not to buy, but to get the listing agents contact information. If you call a few of those realtors to build relationships, you’ve already saved yourself some time.

Good luck!

Costin summed it up perfectly. I think the bigger picture is - when you even think you thought of everything...you didn’t and there is room for conflict/disagreements.

IF you do partner with someone, hopefully it is a quick transaction like a fix n flip where you guys are in and out quickly.

If more long term, on top of everything Costin said, make sure you have an exit strategy, write it down, and stick to it. Things can change even if you’re on the same page going into a deal.

Whatever you decide though, good luck!

So I was reading an article regarding the new tax plan that mentions investors using ‘Opportunity Funds’ to purchase real estate in ‘Opportunity Zones‘?

Is there anyone who might be able to go into more detail about what is considered an Opportunity Fund?

The cliffnotes version of this part of the plan, from what I understand, an investor can put existing capital gains into an Opportunity Fund, and from there, if they keep the property for 10 years, they don’t have to pay ANY taxes on the ‘new’ investment and only pay taxes on the original capital gains that first went into the ‘Fund’.

This seems like a huge opportunity for any buy and hold investor. 

I am NOT an accountant or lawyer so if anyone out there can shed some light, I’d appreciate any insight!!

Thanks everybody!