All Forum Posts by: Ko Kashiwagi

Hi Mike,

Are you in negative cash flow because of the vacancy? If you are able to handle to hold on to it and you are sure you can pull out more cash from the refinance, it would be smart to wait. Alternatively, you can source other financing like HELOC from your primary or private funding.

Hi Carlos,

Have you run a cost benefit analysis over the period you'd be holding a HELOC/refinance during the ADU development? Over a long enough time, the cash out refinance may be cheaper due to the lower interest rate. If the new monthly payment from the new refinance is not manageable, a HELOC may make more sense.

Hi Arshiya,

Typically a Hard Money Lender will look at your:

• Down Payment (assets/liquidity to put into down payment) - 20-30% for first time investors
• Property value and After Repair Value
• Rehab Plan and Timeline - detailed rehab plan with realistic timeline and budget
• Experience - not necessary but helps
• Financial Strength - credit score, track records
• Exit Strategy - how you plan to pay the loan off

Hi Sol,

Congratulations for almost completing your rehab! Have you looked into the difference in cash flows between buying 1 property or 2 in your market? Depending on the market, 2 properties may bring in more cash flow than 1, as more units generally mean more potential rental income. However, this does mean more management so it would also depend on your management capacity.

In terms of your loan limits, you can certainly overcome this by using a different lender or using a different program. Especially with lenders that focus on business-purpose loans, there is usually no limit as long as your credit and liquidity is qualified. And yes, typically it's most cost-effective to pull all the equity at once rather than multiple refinances. An alternative to this solution would be for you to purchase a multi-family rather than 2 separate properties.

Hi Paul,

I'm curious as to what kind of loan you applied for? You can use mortgages that doesn't require much more than credit scores and down payment such as DSCR. If you use a Full Documentation loan, it is common that lenders look at all your income and assets.

Hi Jason,

Here's a few things I'd be mindful of:

• Separate Personal and Business Finances - get an EIN, open business bank account and use it exclusively for business
• Maintain Documentation - keep records of all business transactions and contracts
• Comply with Legal Formalities and Tax Regulation - adhere to all state specific regulations

In terms of the STR and LTR, it's generally recommended to put them under an LLC by transferring ownership or quitclaiming. You can also get an umbrella policy for insurance. You don't necessarily have to create different LLCs for each properties, but if you have a large portfolio, usually they should be in multiple LLCs.

Hi Ashely,

For a cash out refinance, I haven't seen one that can do better than 75% LTV personally. We offer 90 days seasoning and typically close on average 21-30 days.

Happy to help!

Hi Jackie,

Yes, Single Member LLC can be taxed on your personal tax return as it is a pass-through taxation entity. SM LLC is generally treated as a disregarded entity, which means that the LLC itself does not have to pay taxes, however state taxes may be different. Profits of the LLC are subject to self-employment taxes.

This does not change the fact that the LLC generally provides a liability shield, protecting your personal assets. That being said, this projection isn't absolute if you don't maintain the formalities of the LLC (including co-mingling of personal/business funds, corporate governance).

Hi dam,

Yes, typically the downpayment, closing costs and holding costs are covered by the investor out of pocket. Some lenders will finance the holding cost, but this is rare. There are also instances that loan interests are paid at the end of the project (withdrawn during sale/refinance) which is referred to as accrued/deferred interest.

Best of luck!

Hi Kay,

I'm curious as to how the rents were not raised for 6 years - did you tell them you wouldn't raise the rent as long as they kept up the rent?

If you are going to increase rent, there are a couple of tips One being providing ample notice so they have options to leave and find a new place. And secondly flexible options like cash-for-keys.