All Forum Posts by: Joseph Cacciapaglia

Rental data isn't reliable in every market, especially online rental data. Some markets don't require people to report when the unit has actually rented. You should contact a good property manager and ask about leasing times in the area. I know anywhere that we actually want to manage has properties that lease in 21 days or less. Anything more than that causes real problems with cash flow. 

Buying turn-key homes or multifamily isn't 100% passive, but can be extremely close to it, if you have a solid property manager. I know a lot of investors that buy properties here in San Antonio from out of state, and some of them have never even seen their properties in real life. A good property manager will handle 100% of the issues that arise. They will contact you and give you options, whenever something comes up. They'll have in house maintenance for small problems, and have plenty of vendors for larger issues. You will have to make decisions, unless you grant them discretion for certain things. I like this strategy better than most syndication deals, because you have more control. You can refi or sell whenever you want. You can decide to upgrade units when you have additional cash, and it makes sense, or you can switch to vacation rental, if your manager provides that service.

This is purely about your appetite for risk. If it were me, I would certainly focus on stabilizing the properties I had, before refinancing. Is the vacant house rent ready? How long to properties take to rent in that neighborhood and price point? We typically expect properties to take no more than 3 weeks to rent. If the same is true for you, you would have the first one full before you could finish a refinance. How long do evictions take in your market? Here they're very quick, so again you wouldn't be waiting long for a refi.

Don't fight the market; the market always wins. You may be able to slightly beat market vacancy, but I wouldn't count on outperforming by a ton. Also, the way you describe the area, makes the capital appreciation seem somewhat dubious. If you can't attract tenants to an area, it's tough to get home buyers. 

It's tough to find a deal here in SA that doesn't have some level of foundation issues. I like Arch Foundation Repair. They're based in Dallas, but have people here in SA. They expedite their quotes for real estate agents, which is awesome. There is a form on their site for that. I don't think there is any negative impact on the long term value, because it's so common here. People are glad to see that it was actually addressed. However, when getting the foundation repaired, it can often damage the plumbing and structure. The repair companies won't cover this damage. So, you should have a contingency on top of the foundation quote.

If you bought in 2018, you could probably get a lower rate today if you cash out refi, as long as your credit/income is still about the same. If you've built a little equity, you could pull it out for the renovations. Your payment might not even change that much, depending on the delta in your rates.

If multifamily is your preference, then you should definitely start with that. You can always fall back to SFH. For 2-4 unit owner occupants, the process and rates are not much different at all.

It seems like this property wouldn't cash flow with a decent cash out refi, so maybe selling at this point is the right move.

@Ara Abrahamian I agree with your assessment of future cap rates. It's hard to imagine 2.9% being attractive to investors. We're significantly higher than that in San Antonio today, and we still have a lot of push back from buyers. I think as long rang investing becomes more accepted, you won't see the huge premium in CA that you're seeing today. As it is there are tons of CA investors moving there cash here. I don't think there will ever be true parity, but I think there will be some merge.

The answer really depends on what your goals are. If you want to build up a portfolio of rentals, then you could always cash out refi, keep this property, and buy your next one. You would be an accidental BRRRR investor at that point. However, if you're just interested in taking the cash and want nothing to do with holding rentals, then this is probably a good time to sell, because of the capital gains issue you mentioned. You have to look at what you would do with the cash, and compare it to what you're getting currently.

One thing that's not clear is to me is how you have $1,495 in expenses if you bought the home for cash. Have you already cash out refied?