All Forum Posts by: Brant Richardson

"How soon after can I refi?"

The seasoning period is 6-12 months depending on the lender.

Its the perfect way to break in...if it cash flows or at least pays your rent. The other big if is whether you will qualify for the loan. One of the banks favorite questions is how long have you been at your job?

You can learn to landlord as you go along. DO NOT rent to your buddies. For the most part, the older the tenants the better.

You better add repairs into your cash flow calculations. It may not need them now but 9 college students will take their toll at every turn over.

Edit: maybe you did on the spreadsheet but it is too small for me too.

Like Jerry said
"Lets see you highly leveraged your money, you raised private capital, you used owner financing, you have great cash flow" plus you're doing it with an LLC. You're rocking it.

C all the way for me. Interest rates are low and now is the time to leverage so B is out. If I already had 8-9 SFR's with loans and had an extra 100k then I would go for plan A.

Like Dawn said, you couldn't use 20k for each down payment though. I am in the process of doing this exercise in real life. I am finding that its more like 12k down + closing costs + rehab to get to 20k cash spent on each property.

Listen to some of the podcasts, you'll be hooked. They are interviews with real people that begin with "How did you get started with realestate?" and they take you through their personal experience to success and what they are doing now.

If you have money in a IRA or 401k that can be borrowed against, the bank will count that as part of your 6 month reserve money. 6 months reserves on cheap properties isn't that much. If P&I + tax + insurance was $350 then reserve for your 6 units is only $21k. So refinancing one of them covers them all easily.

I agree with Steven Stokes that you have a lot of potential money tied up with those rentals and interest rates are good right now.

If you financed all 6 of your units you could pull out $200k to use for a down payment on further acquisitions.

Those units will still be cash flow positive paying down a $34k loan right?

You could take out a FHA loan for your primary residence so that you need a small down payment. Then use the bulk of your $200k for your multiunit property.

Your debt to income ratio is going to become important. It is good that you have been renting the units for over 2 years because that will count on your income. However, if a large part of your income is from the 6 rental units you might run into trouble once they are all financed and not bringing in as much cash flow. If you have enough income from other sources then you are Ok.

Another problem. Going beyond four loans, the bank will want to see cash in reserve to cover 6 months worth of mortgage payments, insurance and taxes for ALL of your properties before giving the next loan.

I am payng 5.125% now at Wells Fargo. 6% would just mean my initial buy in would have to be a little lower to get the same cash flow. I would definitely still be looking for conventional financing.

I am an out of state investor. If I had good cash flow opportunities like Ohio near by I wouldn't even consider out of state investing. Forget appreciation, go for the cash flow.

I do not use turn key companies because I don't trust them. You have to take their word for it about the location being good, the value of the property, the quality of the rehab, what it rents for, the quality of the tenant they placed before the sale... there's a lot of opportunity for them take advantage of. You need to know the area to not be taken advantage of. But if you know the area, then why pay retail to a turnkey company? They buy houses which they can sell for a profit, not necessarily the houses in great neighborhoods with good schools that will attract quality long term tenants. I have no doubt that there are good turnkey companies out there, but one of my buddies got swindled so I can't help but be skeptical.

If you are interested in Kansas City I have a guy who can help you buy a property under value, rehab and property manage, but I think you would be crazy to go out of state chasing appreciation.