All Forum Posts by: Luke Schrotberger

Hi @Josh Terranova

I‘be had section 8 tenants in Jackson for the past 7 years and have had a positive experience. The Jackson Housing Authority is responsive and supportive. Happy to answer any specific questions you have. Luke

@Steve K.

Thanks for posing an engaging question.  The comment about pre-fab housing @Allen L. and the climate change migration to places with fresh water @Marcus Auerbach. To add a couple more thoughts to some already interesting dialogue...

1. As it relates to @Tim Delaney Blockchain point, I believe that could have further implications than just the simplification of the process (thanks for the link of what is going on in Reno @Ryan Olsen ). It could also provide new options for split ownership. This could make offering "shares" of a home easier and could provide the ability for renters to earn some type of equity on their rent and create an entirely new hybrid model of ownership. 90% of my parents net worth is wrapped up in the home where I grew up.  That is not exactly a diversified financial risk strategy. I'm wondering if the future holds a model where people are willing to have less commitment to one specific house, in exchange for building equity in a multiple houses.

2. Which leads me to a second potential disruption. Increased Mobility. With more people working remote, as noted by and others, in addition to more Boomers retiring and not wanting to travel, furnished rentals will continue to establish a larger percentage of the rental inventory.  Weekend rentals are still at risk of further regulation, but I see 30+ day furnished rentals gaining demand. IF more people use long term furnished rentals as a primary housing solution, THEN people don't have the traditional "Community" anchored in neighborhood friendships, therefore the furnished rentals that have multiple units or shared common spaces where interaction with other "digital nomads" / "slow vacationers" will be able to get a premium price.  

3. Related to @Max T. point about solar, I see the decentralization of energy sources being a future disrupter. Battery storage (think Tesla's solar wall) will dramatically drop in price and allow a neighborhood solar farm / or multi-fam roof solar to collect and store enough energy for all the local needs. This could allow RE investors to become the proxy utility and add a revenue source by billing tenants directly. 

Hi @Michael Lewis

When I built my rental portfolio out of state (I live in CA and bought in TN), I had the most success with building  a relationship with a local/regional bank. Simmons has been a great partner for me and has funded me to all me to grow the portfolio to 30 doors. I walked into 9 banks in town and they were the only one who was willing to work with "an out of towner", so it took some work to find the right partner.  

Financing on 5 unit buildings are definitely more limited. You need to find a lender that does commercial loans and many of the national commercial lenders have a minimum loan size closer to $500k. I encourage to spend a few days in Buffalo looking for local spots. I can also refer you to a couple lenders who may have an option that works for your situation. 

Luke 

Hi @Christopher D..

I'm a mortgage broker based in San Diego and I'll add a bit more info to what you're seeing and hearing. Last week Fannie announced they will not buy "cash-out" type loans that are in forbearance. Many lenders stopped doing cash out altogether and others increased rates to cover the risk. From your description of your situation, you are looking for the most "expensive" type of refi, which likely isn't apples to apples with your friend's recent refi on his rental property. Lenders typically increase the rates, in the industry we call them "hits", for investment properties, for multi-unit properties and for cash-out types of loans. You're getting hit with all those because they are cumulative.

Although I understand the advice "take what you can get", you would benefit from one more piece of info about the mortgage environment before making that choice. All the industry fundamentals point to lower mortgage rates on the horizon. Again, who knows what will actually happen, however based on the underlying interest rates and note rates, insiders would expect mortgage rates to be lower. Part of this is related to the "note" problem referenced by @Ken Calvin, which has interrupted the normal flow of mortgages through the process. Eventually the flow of the mortgage notes will regain some normalcy, but the timing and underlying fundamentals at that time are the big unknown. Which is why the advice, take what you can get, could be the best thing for you.

Something else you may consider is the path I'm encouraging for many of my clients, which is refi the original loan and get a HELOC. I've use a HELOC company that has a 30 year loan. The first 10 years you can utilize the Line of Credit and during that time you pay interest only. The next 20 years you pay off the balance. This tool allows you to only pay interest on the money once you've found another deal you want to invest in. You also get rid of the Cash Out "hit" on the loan, which should get you a better rate for the 30 year fixed.

Hi @Christopher Grobbel.

You are correct that monthly Mortgage Insurance would be an important factor to consider on an FHA loan. My estimate is that your MI would be about $850-900/month. In addition, FHA loans have an upfront Mortgage Insurance. For a million dollar loan the up front cost would be about $18,000. You can either get a higher interest rate and use the credit to offset the cost or finance it into the loan (or some combo of both).

One way I help my clients evaluate the value of a refi is to determine the decrease in monthly payments and divide by the monthly savings by the cost of the refinance. (including the Upfront mortgage insurance, title escrow, underwriting, etc).  This gives you a simple way to see how many months before the refi will pay for itself.

Check with a local Mortgage Broker and ask them to send you a Loan Estimate which will include all the fees included in the refi so you can make your calculation as accurate as possible.  

Hi @Brian Boyd

I've been investing in Jackson the past few years.  Right now I have about 30 doors.  I'd be happy to share my experience.  I've been through property managers, contractors and landed on some resources that have been supportive.  Simmons bank has been one of the best partners from a standpoint of being able to grow my portfolio. Most of my purchases have been off-market so I haven't done much with agents up to this point.  

I have a family member who recently passe away who lived in Wheatridge, CO. She has an unusual property that includes about an acre of land behind her house.  I'm curious if anyone is familiar with adding density to property in Wheatridge. Any insight into the city planning process, growth plans or approvals for zoning changes would be helpful. 

Hi @KD Cheatham and @Samekia Rivers. Let's connect. 

I'm an investor as well with a group of properties in Jackson as well. I live in CA and have some properties there as well, with a majority in the LANA area.  I'm looking to connect with other investors interested in the area to collaborate with on deals. 

@Darryl Murphy Sr and @Amber Glus, I'm happy to answer any questions for you based on my experience there over the past 3-4 years. 

Luke. 

@Maurice Lucas Jr

HELOC funds from another property are considered your own money. Therefore when you document where the cash came from for the transaction, using HELOC funds would still be eligible for a delayed financing scenario.

Hi Paul.

Welcome to the community. SD definitely has a great community of RE investors on the forums. I'm a mortgage broker as my day job and also working to create a buy and hold portfolio. Primarily I'm focused on SFR's but plan to investigate more commercial investing going forward. I have a couple local friends who are in the land side of the business so we likely have some contacts in common. Best of luck on your journey.

Luke.