All Forum Posts by: Johnny McKeon

@Scott Wolf

my FICO is low 800s. And with a 7.75 % interest rate and after remodeling this property  it will cash flow $1,671 after accounting for maintenance, repairs, property management, capex, earning a 6.90% cash on cash return

@Brandon Croucier

If i refinance again wont the additional lender costs, fees and closing costs be more and add up

I agree it's a declining interest rate environment but I don't see interest rates declining quickly. I'm making the bet after 3yrs rates will be low enough to make sense to refinance 

 Why won't it be smarter to buy the interest rate down and lock in a lower interest rate now. Here they look at my lender costs

How do you feel about a 

$700k purchase price with a non owner occupied 4plex DSCR loan 3yr prepayment penalty, 10yr interest only 30yr fixed after

$560k loan amount (20% down)

7.750 par rate with no costs. monthly payment $3,616.66

Or pay $22,295 in closing costs and get a 6.375% 

Monthly payment of $2,975

The monthly payment difference between the two is $641.66

And when you take $22,295 in closing costs and divide it by $641.66 that will give you 34.5 months (2.89 yrs) to break even if my math is correct

How do you guys feel about taking a lil less than 3 years to break even on $22,295

And the seller is giving me $15,500 in seller concessions 

thanks for the advice guys!!

Out of 11 of my small multifamily properties I've house hacked 6 of my 4plex's all in the Phoenix Arizona metro. My last 2 house hacks i negotiationed seller concessions to help with closing costs and interest rate buy Downs. 2023 4plex house hack was $11k in sellerconcessions and the 2024 4plex house hack was $15k

I'm currently Under-contract on a non-owner occupied 4plex. Going with a DSCR loan 20% down. 10yrs Interest only. 30yr fixed after. 3yr prepayment penalty.

I'm Realtor and The seller accepted a $50k lower offer and $15,500 in seller concessions. With the lower purchase price and the seller concessions I'm going to buy my interest rate down to 6.375%. With those two combined that is going to help me have a lower monthly mortgage payment.

have you thought about negotiating a price reduction and negotiating seller concessions that you can use for buying a lower interest rate and/or closing costs?

How do you feel about a 

$700k purchase price with a non owner occupied 4plex DSCR loan 3yr prepayment penalty, 10yr interest only 30yr fixed after

$560k loan amount (20% down)

7.750 par rate with no costs. monthly payment $3,616.66

Or pay $22,295 in closing costs and get a 6.375% 

Monthly payment of $2,975

The monthly payment difference between the two is $641.66

And when you take $22,295 in closing costs and divide it by $641.66 that will give you 34.5 months (2.89 yrs) to break even if my math is correct

How do you guys feel about taking a lil less than 3 years to break even on $22,295

And the seller is giving me $15,500 in seller concessions 

thank you everybody for your help!!

I'm a licensed Realtor who represented myself in this transaction and I closed on a 4plex in Mesa Arizona beginning of June 2024 for $1 Million taking advantage of Fannie Mae 5% down ($50k) owner occupied loan ($950k loan) to house hack this property. All units are 3bed/2baths. 2005 year built. Excellent location in Mesa.

I shopped around and I found a mortgage broker who was able to get me a 6.99% rate who took the loan to UWM (united wholesale mortgage).

I negotiated a $15k seller concession I used for a 1-0 buy down so my rate for 1 year will be 5.99% and then revert to 6.99% for 30yrs. and then we used the rest of the concessions for closing costs. in 6 months or 12 months I will revisit to see if mortgage interest rates dropped significantly to justify a refinance to lock in a lower interest rate.

part of the approval process for the Fannie Mae 5% mortgage is to make sure that i could afford this property and that i have good credit, my income is consistent and stable and it reflects that on my tax returns, I have sufficient capital reserves for the subject property and my other 10 Multifamily properties (6 months of PITI for the subject and then it's percentage based off of the loan amounts and how many properties you have)

I agree, the more that government "helps" they therefore are increasing pricing. (more dollars chasing fewer goods is a recipe for inflation). With Fannie Mae and the other conforming loan programs you still have to qualify to be approved and deemed you can afford the new purchase. I've used VA, Fannie, FHA , a commercial lender and they required extensive docs. my bank statement loans, DSCR, and Seller finance didn't require that much docs. I don't agree with the claim you made they're approving loans for buyers who can't afford their new payment. I agree with you that this program will be one of many factors in why prices increase

There are two kinds of inflation:

1.Non-monetary inflation.
Prices go up because of government restrictions, lockdowns, regulations, Disrupting Supply chains causing prices to increase

2. Monetary inflation:

• The Federal Reserve (Fed) can increase the money supply by changing the target fed funds rate, buying Treasury securities or MBS (Mtg backed securities) to lower rates. increasing the money supply, which banks can then lend to consumers and businesses.
• Debt monetization. The government can borrow money from the central bank to buy goods and services, and then repay the debt by printing more money. This is essentially the same as printing money to buy goods in the first place.
• Quantitative easing. This monetary policy is intended to lower interest rates.

essentially

when you print currency your devaluing it causing prices to increase (more dollars chasing fewer goods)
also lowering interest rates has a stimulative effect to increase pricing because people borrow more
And it will make consumer goods and asset prices more expensive

The people that survive and thrive during inflation are the ones that are buying assets and I believe low down payment loan programs are great for buyers just getting started and for buyers who already own property. I would probably be still working as an AZ State Corrections Officer making $20hr and I wouldn't have my rental portfolio if it wasn't for my 0% down VA loan, FHA 3.5% and Fannie 5% down. Those loan programs allowed me to get into the real estate game and buy my 1st property in 2017 after separating from the U.S. ARMY and buy multiple properties after.

I need this book. I currently own 11 properties with 49 units with another 4plex under contract in Mesa, Arizona and I'm self managing myself. I need to learn more about scaling, delegation and taking myself out of the equation.

how did that work doing a partnership using FHA? did they want both people on the loans to live on site?

Thanks @Kyle Spearin. you guys have some expensive properties up in Boston too. 

Are you currently house hacking or looking for a house hack in Massachusetts? 

Thank you @Zach Wain for your explanation when you think it's best to jump on a refinance. if rates trend another 50 to 100 basis points lower I'll look at a refi for sure

how do you do a no cost refi? is the cost baked into the loan or the interest rate?