All Forum Posts by: Troy Brown

@K. Marie Poe You make some great points. I am being conservative on the Taxes and Insurance because i havent received a quote on what it would cost to insure them. I know USAA wont cover them b/c its a coastal area and i already have too many properties in that area for them to accept the risk....so i have to shop around for it.

Also, I meant to say 10% per expense for those three costs so a total of 30% but i know a rule of thumb here on the forum is take 50% off the top so ill take a look from that perspective.

@Matthew Paul I agree, im always interested in motivations although it can be very hard to ferret out. Talking to the tenants is always a great idea and i will certainly try to get someone to do it for me, unfortunately the military has me several states away from the properties.

I will be putting down 10% now and financing the remainder through owner financing at 4%. As the deal currently stands the option to cherry pick the best 4-5 doesnt exist, although i havnt actually put in an offer to that effect.

BP'ers

Thanks for the quick responses.

My quick thoughts:

#1 The perk for me is a long term investment that will cost me 12k and yeild me a 500k property after ten years (about 1 year after my military retirement date)

#2 I allocated 10% in property management b/c i dont have the ability to manage from afar. All of these properties are on the same street and represent 90% of the street. It is a blue colar area with consistant rental history.

#3 Taking into account my other three properties, i would still be in positive ccash flow ( the 100 is technically absorbed by some positive cash flow on other properties). I dont yet know if any of these properties' major systems (roof, HVAS etc) need immediate repairs and this will factor into my decision. Also, this deal will effectively knee cap any future investment in the next 5-10 years as i feel i will be extended as far as i currently m comfortable with. I certainly wouldnt be able to get any more traditional loans with 13 properties under my belt. The only exception i could see would be future primary residences that I buy with VA loan as i move to another duty station.

Thanks,

Logan

Evening all,

Im at what i think is a huge decision point and need a little help. Just some quick background... Im a Young military invest with three properties under my belt and a strong appetite for risk.

My Investor minded realtor always sends me deals and he recently sent me a listing for a 10 property portfolio of SFHs for about 450k. The owner is willing to owner finance @ 4% amoritized over 10 years (the terms are flexible) I cant qualify for traditional financing on this deal simply b/c my D/I wont allow for it. At the end of the day i'd probably be in the red about 100/month after being VERY conservative on PITI, and 10% each for property management, maintenance, and vacancy.

My income can handle much more than 100/month in the red on this and my rationale is that after "investing" 100/month over 10 years i would have a 500k (conservative estimate) portfolio i only paid 12k for. I also understand that i could shop for a refinance on this portfolio at some point in the future and possibly get different terms if i need them.

There are a few variables, of course. If these properties are deeded independently then i assume that the closing costs will be very expensive. If, somehow they are deeded as a portfolio then i wouldn't have the easy ability to sell, say 5 of them, in the future if i want to.

I will post more detailed numbers once i complete the property analysis spreadsheets i've dowloaded from the BP thread on the subject.

Thanks,

Logan

Wow,

Thank you all for the insight and adjusted numbers. My loan officer also recommended me approaching the selling bank in order to determine if they are willing to be a little more flexible in getting rid of these, or allowing me to "take them off there hands".

I think ill take your advice into account and proceed down that path and at least see what comes of it. At the very minimum i think purchasing them individually (with individual closing costs) is a non-starter for me. Id also like to ensure it remains a non-commercial loan which is why i was thinking only of the four units.

Ill keep you in the loop as to what they say and what happens.

VR

Logan

Morning Team,

I am a military member who has a small portfolio of homes and after joining the site i have really been scouring a few markets im comfortable with for that perfect multi-family. Ive made a few offers but none have come within an acceptable margin so i had to pass on them. My Investor-Friendly realtor recently presented me with an opportunity and although im interested i think there is some complexity that puts it a little out of my realm of understanding. Please take a look and give me your thoughts.

It is a bundle of 5 condos presented by a local bank they are asking 37k a piece but my realtor thinks we could get them at 30. below are some details and an initial analysis of a cash on cash deal. (I will need to finance)

Below are the rents, HOA's, etc. relative to the 5 Units at Pinegrove.
Unit F is vacant. One of the others (unit - C, I think) has an expiring lease,
the other three are presently on month to month.

Rental Income

Unit Rent Yearly
Unit I $650 $7,800
Unit II $600 $7,200
Unit III $600 $7,200
Unit IV $625 $7,500
Unit V $590 $7,080 *This unit is vacant at present.

Total $3,065 $36,780

Expenses

HOA $100/month $6,000
Property Manager 10% $3,678
Taxes $696/unit $3,480
Insurance $700/unit $3,500
Up Keep $3,000
--------
Total $19,658

Net Income $17,122 (for all five)

Debt Surface (assuming i purchase 4)

120k - 24k down payment (20% per my loan officer)=96k

96k @ 5%= ~515/month (P&I) or 6184/year

If im simply dividing the 17k number above by 5 i see that i could net almost 3500/property/year for a total of 14k once paid of or 7816/year while paying on the debt.

My question first and foremost is how do the numbers look?

Secondly, im curious about the best way to finance this? My loan officer and agent have advised that if i tried to do anything commercial it would incur a higher downpayment and interest rate. If i do traditional, however, im worried id have to get a loan on each property which would incur multiple closing costs etc etc etc...

Any help or thoughts would be appreciated

Thanks,

Logan

Morning Team,

I am a military member who has a small portfolio of homes and after joining the site i have really been scouring a few markets im comfortable with for that perfect multi-family. Ive made a few offers but none have come within an acceptable margin so i had to pass on them. My Investor-Friendly realtor recently presented me with an opportunity and although im interested i think there is some complexity that puts it a little out of my realm of understanding. Please take a look and give me your thoughts.

It is a bundle of 5 condos presented by a local bank they are asking 37k a piece but my realtor thinks we could get them at 30. below are some details and an initial analysis of a cash on cash deal. (I will need to finance)

Below are the rents, HOA's, etc. relative to the 5 Units at Pinegrove.
Unit F is vacant. One of the others (unit - C, I think) has an expiring lease,
the other three are presently on month to month.

Rental Income

Unit Rent Yearly
Unit I $650 $7,800
Unit II $600 $7,200
Unit III $600 $7,200
Unit IV $625 $7,500
Unit V $590 $7,080 *This unit is vacant at present.

Total $3,065 $36,780

Expenses

HOA $100/month $6,000
Property Manager 10% $3,678
Taxes $696/unit $3,480
Insurance $700/unit $3,500
Up Keep $3,000
--------
Total $19,658

Net Income $17,122 (for all five)

Debt Surface (assuming i purchase 4)

120k - 24k down payment (20% per my loan officer)=96k

96k @ 5%= ~515/month (P&I) or 6184/year

If im simply dividing the 17k number above by 5 i see that i could net almost 3500/property/year for a total of 14k once paid of or 7816/year while paying on the debt.

My question first and foremost is how do the numbers look?

Secondly, im curious about the best way to finance this? My loan officer and agent have advised that if i tried to do anything commercial it would incur a higher downpayment and interest rate. If i do traditional, however, im worried id have to get a loan on each property which would incur multiple closing costs etc etc etc...

Any help or thoughts would be appreciated

Thanks,

Logan

Hello All,

So im a relatively new investor with two rentals and a primary residence. I'd like to leverage some of my equity to purchase my first multi-family unit but am having a hard time getting to it. Hopefully you can help...

After looking at Comps and having a realtor who has lived and worked in my neighborhood for about 11 years walk through the property I estimate my primary residence is worth about 335 or 340k, i owe 224. ~110k in equity

One of my rental properties is worth about 100k and i owe about 60k ~ 40k in equity.

so grand total I "think" i have about 150k in equity.

Unfortunately i havn't been able to find a lender in my state (va) who will do an interest only HELOC at 90%. I am a Marine but NavyFed and USAA just dont have great terms (the former doesnt have interest only at 90% and the latter only goes up to 70% LTV). B/C of this i went with M&T at 85% LTV and got the ball rolling on the HELOC. Unfortunately, the appraisal just came back at 315k instead of 335k and at 85% that only gave me about 40k to work with. I KNOW my house would sell for much more in my neighborhood but dont know what to do about the appraisal.

I havnt pursued any options for pulling any equity out of my rental b/c i didnt think id need to and a HELOC would yeild so little. If I REALLY needed it i guess i could try a cash out refi.

Any recommendations to help me squeeze out any additional equity would be greatly appreciated.

-Logan

One thing I forgot to mention, My girlfriend lives with me and makes and additional ~30k.

Any ways i can creatively leverage this? I understand we're not married or applying jointly. B/c she pays a portion of our recurrent bills anyway (which i am currently calculating into my DTI) could I simply explain this to the bank? Im sure their answer will be that love is fleeting and they must factor all possible debts as if she and I split ways tomorrow.

I dont want to Apply jointly because i've read some threads here about how I could extend my portfolio beyond the bank sanction 4 - 5 investment properties by putting them in her name when we're married.

Thanks for all the input,

Firstly, Rick, thanks for the warning. My intent is to buy and hold. So my upside down condo hasn't hurt too bad as the mortgage is always paid and this quad should cashflow at current rate despite relative value of the property, provided taxes and insurance dont drastically change because the debt service should otherwise remain constant.

I should add that I am an active duty military member and Navy Fed Credit Union stated they offer HELOC's up to 90%.

My Loan Officer and I have a great relationship and I am not too concerned with securing the loan AFTER I have the liquidity from the HELOC. My primary concern is securing the HELOC with my DTI.

Troy, concerning the 2% rule I regularly see here at BP. I understand that is a great goal; however, I also see SEVERAL experienced investors here state they are happy when they can cashflow $100 - $200 per door, despite the 2% rule. As best as I can tell this property will meet that standard. I will continue to keep my ear to the ground but with interest rates and prices rising i (initially) feel this to be a contender.

Thoughts?