All Forum Posts by: Ko Kashiwagi

Hi Vlad,

I think this ultimately depends on your goal in really state. If you are looking to gain experience and build your own portfolio, having full control is important and will cultivate the most experience. I personally wouldn’t pay 5% over market though, as you can buy properties at the right price as long as you keep on making offers.

If you want to take a much more passive approach to real estate (for example - no intention of becoming a full time investor and is busy with employment), becoming a LP is not a bad idea.

Hi Ronin,

There are a couple alternative options you have. For example, you could cash-out refinance the property to and use the cash downpayment to fund your next property.

You can also move out of the primary resident, rent it out (for 2+ years) and do a 1031 exchange, which would defer the taxes.

A Deferred Sale Trust is another strategy, where you can sell the property to a trust in exchange for a promissory note. By paying taxes on the income you receive from the trust, you can potentially spread the tax burden over many years.

Hi Molly,

Since, you are merely using one loan to pay off another, it doesn't seem like an efficient use of capital (especially if the loan you are paying for the primary has low rates). Also considering you are paying lender fees, it could be costing you more. Does your current rental property not cash flow positively?

The most common strategy is to use the existing equity to put into another downpayment and buy another property - this provides an effective use of leverage as you are expanding your portfolio. Ultimately, it sounds like the decision would depend on the interest savings you'd get.

Hi Pandu,

HELOCs are generally for primary properties, and it's rare to find a lender that will give credit on investment properties, although it could be possible. I would look into local credit unions as they may offer unique loan products. There are HELOANs available for investment properties, which are second mortgages that are close-ended (cannot withdraw multiple times).

Hi Jessica,

DSCR is calculated by the (NOI)/(Annual Debt Service). In terms of residential investment properties, this is usually the rent/(PITI). Minimum ratio depends on the lender but typically it is above 1.0. The higher the DSCR, the better rates you could potentially get.

The primary collateral for a DSCR loan is usually the investment property itself. The lender secures the loan by placing a lien on the property.

New developments like schools, parks, shopping centers, or transit improvements can increase property values and rental demand, and potential negatives, like increased traffic or noise could affect the desirability of the property.

Ko Kashiwagi - [email protected]

Hi Rahul,

That is odd that you were asked for tax returns for the fix and flip loans, as hard money is usually not a full document loan. A lot of lenders would be willing to provide pre-approval a lot easily than what you mentioned.

Hi Shivani,

There are non-conventional loans you could still obtain, provided a good credit:

1. Hard Money Loans - doesn't necessarily require W-2 and you can do fix & flips or BRRRR

2. DSCR - only looks at the rental income vs PITI and credit score (you can also buy a property cash and refinance with a DSCR)

3. Conventional - some conventional loan options allow you to use a job contract or college history as proof of work, but this is rare

Hi Sean,

If you think it's a property you wouldn't want to keep in the long run, it's a good idea to move onto something else. You also have the option of refinancing rate/terms with your current lender and change it to more favorable terms. Alternatively, you could do a cash-out refinance into a 30 year fixed, if the numbers make sense.

Hi April,

If you are using a financing that requires LLC vesting, it is a good idea to get started now. That being said, most loans take longer than 3 weeks to close, so you should have enough time even if you start at the time of you offer.