All Forum Posts by: Josh Deel

Hi all- so here’s the short end of it... I have a 100+ acre farm in Virginia. I bought it in 2013 as just raw land for a little over $305k. Since that time I’ve put nearly another $200k into it in the form of infrastructure and a 2000 sq ft house (doing nearly all the work myself).

In the past couple weeks I began the process of doing a cash out refi with a local bank to pay off an owner finance note I have on the property and to put an additional $30-40k in landscaping, a barn, and a few other items like front porch decking.

I was hoping the new appraisal would reflect everything I’ve been doing so that I not only have money to do the above, but also in the near future serve as available equity to use as a major down payment on a 16-20 unit apartment building. Heck, the new tax assessment we received for 2018 puts our property over $450k.

Unfortunately the appraisal came in today at just over $330k. To be honest, I’m crushed. This was largely driven by the fact that a neighbor recently passed away and the heirs to his estate did a fire sale of his home and land which totaled very similar in size to mine. This property sold for *surprise*surprise* just over $330k. And it’s a very old and dated house.

I don’t know what to do. Should I proceed with the cash out refi, make the improvements, and then get a non local bank to appraise it to see if the value is changed? I’m thinking non local in the hopes they’ll just pull numbers on comparable properties that size where they’re from and not this dang fire sale situation.  Oh, did I mention the appraiser also owns a local real estate company and sits on the board of the bank I'm trying to do this refi through?  Should I be concerned?  Is that even legal?

Any input would be appreciated!!!! Thanks in advance.

Best,

Josh

Russell, I could go with another bank and hence another appraiser. Perhaps one outside of the county.  That's what I meant. Thanks for your input.

So, here's my situation... My wife and I own a 112 acre farm in Virginia.  We bought the raw land in 2013 for appx. $305K.  Since then, we've put nearly another $200k down for building a new house, driveway, & some fencing (doing much of the work ourselves).  

My plan is to reappraise the property to reflect everything we've done to date, then pull out equity to pay off a few debts and also have a large amount for a downpayment on a 12-20 unit apartment deal.

The most recent tax assessment of our property (which doesn't reflect a lot of the work we've done in the past 6-8 months) has the property at $430k.  From what I researched, depending on the multiplier used, this should represent 60-80% of the appraisal value (which had me stoked!).  

HOWEVER, the appraiser just left and during our conversation explained that the new law is that assessed value has to be 100% (which I took to mean that my appraisal can't be above this number now).  Further, the appraiser told me he has to go by local comps- which in the rural location of our farm isn't promising since very little turnover happens unless someone dies.  The appraiser told me our appraisal could even be LESS THAN the assessment, which has me on pins and needles.  

What do you think?  Does what the appraiser told me sound correct?  Did I mention he's also on the board of the local bank which I approached to do this loan?  Should I be concerned, or is that irrelevant?  Should I hire another appraiser?  Or is that a mute point now?  Help!?  TIA!

Best,

Josh Deel

Good point Brian!  So, what kind of quarterly distributions are we talking? Is this a percentage of what they invest, or just some agreed upon amount?  These are the kinds of details I'm hunting for so I know how/where to begin.  Thanks again for any insights you may have or other resources you may be able to point me toward.

Best!

Josh Deel

Hi all! Question- if I bring investors into my real estate deals, what are some of the best ways to structure their paybacks? Monthly/yearly percentages? Payoff upon selling? Just looking for some best practices/ideas. Thanks in advance! Josh Deel

Excellent point, good tip! This is the type of back and forth I’m looking for. I want to make the best next move possible, with the latter steps in mind as well. 

Right, so even though we’re talking about a different property now, the cash I put into it from my equity credit line isn’t going to be “equity” in the truest sense if I wanted to use it again on another deal, even to a new lender? 

I suppose the only way this would work is if I used my equity to outright buy a deal, not just make a down payment on a bigger deal, then immediately after closing get a traditional type note on the new property and thus “replenish” my initial equity to repeat the process. This would certainly reduce the size deal I could hunt for.

I understand the original amount borrowed has to be paid, and it will, to “lender A”. But once I have the new property for which I use my initial equity as a down payment, the money that is now parked in the new property is my equity, regardless if I had hard cash to put down or drew from other properties, correct? So, assuming I’m still paying on the initial line of credit, why couldn’t I take out this equity- not from the original property I had equity in to make the original credit draw but the new one I just got? 

I think I understand that within the context of credit cards, what I’m asking is, as long as the initial equity line of credit is being paid on the down payment I have in the deal is my “equity”, right? Could this be pulled out from the newly acquired property to use yet again in another cash flowing property as another down payment? Apologies if I’m not understanding or clearly conveying myself.

So I'm seriously planning to expand my investment portfolio in 2018.  I currently have around $450-500k in equity. My question is, if I were to access this equity via an equity line of credit from "lender A" to use towards the down payment on a multi-family apartment building (for which the additional debt of a million plus dollars would be borrowed from "lender B"), is this "down payment" in the new multi-family apartment deal essentially "equity" that I can access again to use, for example, as yet another down payment on another deal, ad infinitum?   Or, are there limitations to this strategy? Or is the initial equity essentially tied up and unavailable to for subsequent deals until it is paid off to the initial credit equity line lender?  

I appreciate any insights, first hand experience, direction, etc., that may be offered. Thanks in advance!

-Josh