All Forum Posts by: Korie Apgar

@Dolores Waldron

Some banks consider 1-4 units residential and others consider them commercial.  From what I understand, that bases the appraisal on 1. comps or 2. market cap rate and lease values.  It depends on the bank and the only way to know for sure is to call them and ask. 

@Peter Morrissey

Depending on the bank they may consider the duplex residential.  The appraisal would be comparative market analysis, what other comp sales were.  If the bank considers the duplex commercial, then the appraisal is based on area market cap rate and the lease values.  That was explained to me by a loan officer on Friday.   I've also seen the appraisal on one of our duplexes and it was based on cap rate and lease values (commercial lending). 

We're in the process of a duplex refinance after a new kitchen was put in, all new flooring and carpeting, new windows on building etc.  If we went with the lender that considered the duplex residential, I wouldn't be very hopeful for a cash out refi with the area comps and them not taking into account the increased value and lease values.  Hope this helps.   

@Jordan Pugh

Hello,

Not insulting you here, but have you accounted for EVERYTHING?  Accounting, Advertising, Cleaning, Insurance, Lawn Care/Snow Removal, Legal fees, Maintenance & Repairs, Capital Expenses, Taxes, and Utilities....and of course Mortgage?

Also, as far as your ROI, you are plugging in numbers to get you 38%ROI but haven't spoke with a lender yet. Do you know what your interest rate and terms are? Are you estimating with reasonably accurate numbers? Have you calculated your purchasing fees into your ROI numbers? Yearly cash flow divided by TOTAL cash you have in. As far as the rents go, did you see the leases and are you sure you can continue to get that rent should the tenant(s) move out. Not uncommon for a seller to fluff their numbers by having a family member in there with a high rent for papers sake and then when they move at time of purchase, you can't get anyone else to pay that amount of rent because the rental market is not nearly that high. So, know the rents and if they're comparable to others on the market. It's not uncommon for a seller to make it look like they have a higher NOI than actual. This ultimately could be making your cash flow calculations be off and therefore your ROI.

(Always double check calculators too.  I'd feel like a total *** making a huge mistake on an investment because the calculator numbers looked way too good to pass on the opportunity.  Take the time to dig deep this weekend).  Good Luck!!!  -Korie

(This isn't legal advice, I'm just a fellow investor).   

@Benjamin Shaw

Hi, Yes, you're still paying for the money you pulled out in cash in the form of a higher mortgage payment but who's paying for it?  You or your tenants?  Also, rates are so low that you likely won't see a huge jump in your mortgage payment.  You'll have to do the math yourself and have people check you on it.  Not your brother, or neighbor, get advice here, but always do your due diligence!  Your money will lose value sitting as dead equity in a property so get that money back out and reuse it.  Repeat!!  Over and over.   If you don't buy low enough you're screwed.   Know the processes and your numbers.  Good Luck!

Step 3 total gross monthly income.  Run it as if all 12 are occupied to get the numbers.

Higher cap rate, cheaper price, riskier investment.  Location, schools, crime, age, condition are what you need to look at... it's tempting to buy but location is everything. 

@Jackson Long

It's your show, you're the boss.  Get someone else in there right away.  You're losing money.  I learned the hard way too and that person was a referral.  They aren't being referred by that person any longer, but you live and learn.  Good Luck.

@Nili Yosef

Like everyone else mentioned, no need to take out a loan to pay off the seller and then go and refinance to get your cash out. Go find your financing whether it be a mortgage broker or a bank to refinance. (I love small, local banks who keep their loans in-house. Their guidelines are much different than Fannie Mae, Freddie Mac. Some lenders will do LTV ratio of 80% on investment property refinances. Some don't have higher refinance interest rates than their purchase interest rates). Anyway, the costs associated with refinancing are similar to those of a regular home purchase. (Loan origination fee, points, appraisal, junk fees, title insurance, title work fees, etc.) Ask your lender upfront about their fees as well as the title company. Good luck!

@Account Closed

How does it work when you try to refi property in an LLC? I've been reading some not so great things but don't know what I don't know in regards to it. Def. look into it.

@Account Closed

I have not done anything oos.   I honestly can't imagine not being there and trying to tackle that.  Will you be there?  Will your team be the ones doing the work?  If not, sounds like a recipe for disaster with your money.  Get references, lots of them, check all references, seeing jobs completed,  and making sure you use contracts is essential with contractors.