All Forum Posts by: Jon K.

At the time I was active enough that I had a few sources of reliable money. I generally went with private money first because I’d get better rates and terms. But I knew and had worked with a couple of hard money lenders often enough as well to know that they’d fund any purchase in the range I was looking to buy in without issue if my private lenders didn’t have the capital or weren’t interested.

So to answer your question I already had several lenders in place that I had worked with previously. I didn’t have a pre-approval amount per se, I just knew that I didn’t have to worry about funding for anything under maybe half a million and my typical purchase and rehab was in the 150 to 250 range.

It's going to depend on the lender, how it's titled and what kind of refinance you are doing.

If you're doing a conventional cash out refinance, a lot of lenders are going to require a 3 to 6 month seasoning period prior to refinancing and it will have to be rented first. If you're doing a rate and term refinance, there's typically not a seasoning period but again it's common for lenders to require it be rented first.

If you're doing a DSCR cash out refi, it may not need to be rented first but you're probably paying a higher rate.

Your best option is to call a loan broker you trust and go through the options based on your current situation. There's no reason to wait, call them now so that you understand the options.

 Agreed, or it takes a lot of time and rising rents. Realistically it's probably both. 

Approach it like an investment. You're spending X to save(earn) Y. What's the annual ROI on the cost of the points to you in terms of savings? Does that fit your personal criteria for a return you'd like to get on your investment? If so, do it. If not, don't.

Buying it down to 6% looks like you're getting a roughly 20% return on the cost of the points. That's pretty damn solid if you ask me.

I couldn't agree more about the network. I am a firm believer in the adage that your network is your net worth. I've gotten deals and formed partnerships through some very unorthodox connections over the years.

To answer your question, it will always depend on the specifics of the deal in front of me but in general I'd still prefer value-add. I have an amazing GC now that I trust completely so I can do a full gut reno without stepping foot in the property and I wouldn't lose sleep over it. With value-add, I know I'm getting at least some of my capital out when I'm done and I'll end up with a house that should not need any significant cap-ex for quite a while.

I'd do turnkey too if the numbers looked good enough but the reality is in the market where I have boots on the ground you're talking about close to 60k between down payment and closing costs for maybe $200/month in cash flow. The ROI just isn't there. Speaking in generalities of course based on what I usually buy.

But, these days I'm trying to be more passive so things like syndications are a more likely path for future investments. I have solid property management in place with my portfolio so the time commitment is minimal but it still takes up space in my brain.

I've inherited several tenants who were below market. They all left at the first sniff of an increase despite still being below market and they were all pretty upset about it. No good will that the former landlord created will transfer with the property. Do not expect to keep them and be prepared to have to evict.

If the jurisdiction this property is in requires anything in place in order to evict such as rental licenses, etc., get them in place before discussing an increase with the tenant because it's much easier to get inspections and repairs done when the tenant cooperates.

I'm mostly focused on more passive investments moving forward: syndications and private lending to known reliable entities.

I did something this week that caused me to reflect a bit on where I started and how far I've come. It was a fun realization so I thought I'd share it here.

I purchased my first real rental 11 years ago off the MLS for 108k (put 20% down). It's a 3 bed, 1.5 bath townhome. Rented for about $1250/month at the time. It was turnkey so I didn't have to do a thing to it. Over those 11 years it has been occupied for all but 3 months until this most recent turn. Typical maintenance and capex, no real disasters. It has basically printed money for me from day 1.

Fast forward to today. I recently went through an exercise where I examined each property in my portfolio to decide if my capital was positioned the way I wanted it to be and that had me consider selling this property. I ran the numbers two ways: selling vs cash out refi back up to a 75% LTV. I came to the conclusion that a cash out refi was the way to go even though it won't cash flow great afterwards (it'll still be positive about $200/month). Today that same property rents for about $2,400/month and it appraised for 235k.

This is the part that I thought was fun that also made me reflect on things. I was able to pull 110k of equity of out this property that I had bought for 108k. And the reality was I only put 20% down plus closing costs. I know, inflation and those aren't the same as today's dollars etc. But still... It's easy for me to get lost in the grind or to focus on goals instead of progress so I'm glad that I took this moment to remember where it all started and that was with a gamble on this one property that has paid off ever since.

 It only goes without saying if you’re dealing with a smarter person than myself. In that case I respectfully and emphatically agree.

I respectfully and emphatically disagree. Take a break when you need to take a break. Whether it's for a month, or 6, or a year. Burnout is a real thing and there are more important things than real estate investing. I don't care if I'm ahead or behind of anyone else because my goals are not relative to anyone else's progress.

I get your point that staying active keeps your skills sharp and that if you're active when others aren't you will have access to opportunities that they do not. You'll also continue to be building your brand, your network, your experience, etc. But if it's coming at the cost of your health or something else important than time with your family then it's perfectly fine to step back when you need to.