All Forum Posts by: Joseph Medina

Quote from @Colby Wartman:

I have asked my lender extensively and not getting a straight answer. He has said that it is a federal requirement!

Kinda like what everyone is getting at, assuming you haven't come right out and told the lender your plan; is that the lender probably knows what you're trying to do, because honestly, the lending agent and underwriter are people, and if they have been doing this extensively they're up to date on the current trend, and it's no secret that STRs are a very hot topic in the space right now. And based on the brief readings, and it's very brief might I add, you start running into mortgage fraud. there is certain tax verbiage you get into for owning a second home vs. an investment property.  things like the 750,000$ tax deduction on mortgage interest on personal residences, or  your accumulation of wealth to the coveted "accredited investor" status. 

just like @Joseph Beilke said this should be hashed out with your lender, and if their not answering you out right they're probably trying to make a sell and keeping their a** covered at the same time. 

Quote from @Joel Allen:

@Amy Lin

Purely in terms of location, the Stone Oak area of San Antonio would appear to be one of the best areas within the city for a STR. Just a few miles to the west is Six Flags and La Cantera (popular tourist attractions). A few miles to the east is TPC San Antonio, which hosts the Valero Open (large PGA golf tournament each spring). UTSA is within a 15-minute drive (plenty of students' families visiting and sporting events). Camp Bullis and the Medical Center are also about 15 minutes away with the potential to bring in additional visitors.

With that said, I own LTRs so I'm not as well-versed on the city's STR restrictions. And Stone Oak neighborhoods tend to be higher-end, so you'll want to know in advance if the HOA restricts/limits STRs.

yeah I see a few people that touched on this, but higher end areas of major cities they have some major restrictions on STRs. just because the city might be okay with it doesn't mean the HOA is, so just make sure you find out. I am going to follow this post because I am thinking about the san antonio market. 

Quote from @Chris Seveney:

@Mak K.

Why would you pay to fix it?

Yes you will have to make sure everything else gets fixed and check windows as they probably cannot open which when foundation is fixed could still be problematic. Issues like this I take on but if it’s $20k to repair I would discount it by $50k+ to deal with it and all the ancillary side effects

I think this is solid! i think you're going to have hell finding a GC or sub willing to sit around and check window and door frames due to the major housing pop where everyone is wanting to renovate their house. I think 50k$ is low depending on the grade of the lean. if its bad then you're talking flooring issues such as tile cracking and what not and like @Eliott Elias said doing dry-wall work too.

I don't want to sound like a debbie downer, but if unless you have deep pockets or you know how to do the work yourself I might look elsewhere. 

might wanna be careful with the verbiage of your post bud, because even though you're not intentionally doing it you're kind of advertising your deal as a small syndication, and if its not registered with the SEC you can land in some hot water. Just one persons thought though. 

Hey Guys, my wife and I are wanting to get into the STR game and we live in the country of texas LOL; however, i do have some questions...

1.  we have a strategy idea of 'airbnb-ing' the property in the summertime and trying to use the home for Snowbirds in the winter. does anyone have a history of using their properties as a snowbird home? 

2. if so, how does that agreement look?  

3. is there a lease involved? 

or is it more like a traditional STR on a continuous rotation?

Quote from @Evan Polaski:

@Joseph Medina, I cannot speak to 70/80/90s, as I was born in 1982. In the 2010 crash, like most times, cash is king. Lenders will still lend, but at lower LTVs and due to higher interest, you need more cash flow from the property to hit DSCR covenants. Cap rates were also higher, as they are starting to show in larger properties today.

I am not saying there will be a significant crash like in the 90s saving and loan era or the financial crisis.  I think you will see prices start dropping.  You will see bigger properties hit the market because the group can't refi out of their loan, which will be a comp transaction for standard sales as well.  But all told, I think many people will continue to accept lower returns for all the reasons Wale mentions.  Particularly apartments (and I am talking institutional grade) have out performed all other real estate asset classes through recessionary periods, based on NCREIF total property returns for those periods.  At the end of the day, everyone needs a place to live in a good economy or bad.

So, when the lending institutions were lending on lower LTVs, i would assume the the residential LTV rates were that of "typical" Commercial Rates today of 40-50%, how were you able to pull your cash back out or how were you able to drive the value of your properties up in such a way refi-ing was worth it? what were some typical LTVs you saw lenders were lending at?

Quote from @Scott Mac:

Head for Whitefish Bay before the storm hits.

Wait too long and join the crew of the EFJ in Davy Jones Locker.

You can't operate in a storm in the same way you operate in calm seas.

Just my 2 cents.

https://www.youtube.com/watch?v=lE2LOhs5jaE

I kinda figured as much, which is why I am trying to leverage some of the older investors knowledge. for the young investors out there that only know of 1-3% interest rates might be sweating bullets when they might not be able to pull out their cash. But, as @Pat L. said there were people out there making money when rates 18-19% for a mortgage. I dont think we will ever see rates like that again, but knowing how to navigate waters like that will definitely help when fed fund rates hit something like 5%.

When learning to trade stocks, ETFs, Bonds, and Forex I found a lot of truth in the contrarian side of the "story". I'm not familiar with your song, but when I see "clouds" it's full steam ahead.  or the more popular quote from Baron Rothschild " When there is blood in the street, that's when it's time to buy" 

Quote from @John Garcia:

I invested through the "storm" of 2008-2012 and a few thoughts:

1.  Bring more capital to the deal to drive down the debt ratio.  Helps decrease mortgage costs and managed downside appreciation/depreciation risk.

2.  If seller carry an option try to create a deal with a long fixed rate even at a higher interest rate but lower then where one thinks rates are going.  We are doing a MHP deal right now with 20 year fixed term at 6% with a higher downpayment to mitigate the longer term interest rate hike risk.

3.  Think about purchasing for long term in markets with lower volatility even if returns are close to break even.  We have some assets that are syndicated that while don't provide a ton of revenue it gives us the ability to pay down the mortgage and then refi at the right time to increase our revenues quickly while keeping the asset in the portfolio.  

4.  Choose a sector of the market that others are not playing in and also make a lot of connections to find off market deals.  After doing this for close to a decade we have chosen a few niches within multi-family where we don't have to compete with big money and also after doing this for a while we get a lot of off market deals.

Hope this helps.  Best, John

 So, how was securing financing during 2008, what did some of the lending options look like? How did you guys analyze the deals? How was the underwriting? how do you underwrite when the housing market is falling apart? 

Quote from @Pat L.:

I bought heavily during the 80's with rates @ 18-19%, but the homes I concentrated on sold for about 1-2 years my salary. Conv. financing was tough so I concentrated on seller financed sales & rented EVERY room. I even had duplexes rented by the room, plus put rooms in the basements. I converted some of the bigger older homes into 3 units doing all the work myself as permits & zoning were extremely lax. Once the rehabs were completed I was able to refi into rates dropping to 9%. As prices increased I reluctantly sold off a few to achieve free & clear status on those I kept. There were many years of frugal, knuckle busting living but I retired early & never looked back. I still have several from that era, now worth a LOT of $$$.

Thanks a ton for this reply! this was what i was looking for! How did the investors during the 18-19% interest rate days do it! i keep hearing people complain today that interest rates are going up and to stay away, but in my mind i just keep think to myself "man people in the 80's and 90's were investing when interest rates were more than 10%+ and were able to do it, so how were they able to do it? 

people, might be inclined to argue that it was cheaper then, but wages were also super low... 

Hey Everyone, my last post I received some great help, but now, I am looking for advice/ guidance. It's practically July and The Fed meets at the end of July, and three more times after that. I expect slight increases in interest rates maybe a few base points, but nothing like the 75 that happened this month (June) if the market does not slow down if the market does slow down then I wouldn't expect any more interest hikes, especially with gas prices pushing down traveling demands and slowing the economy down in its own way. 

My question is: 

For the more seasoned RE Investor, like investing in the 70s, 80s, and 90s, how did you go about finding multi-family deals and making the numbers work?  

I could only assume interest rates back in those times I listed were pretty high , because SFR mortgages were high; moreover, how did you go about funding them? Because everyone who says "I'll wait for the next crash" doesn't realize that unless they have a stack of cash piled high, no lender will lend money during the crash and if they do the terms will be highly unfavorable and good lenders will be far and few between with some going out of business.

So how do you invest in the "storm"? 

Even those who invested in the 2008 bubble burst, I would love to hear how you were able to secure financing and what not!