All Forum Posts by: Luke Schrotberger

Hi @Jon C.

If your goal is to build a rental portfolio, then plowing any equity you get from selling your home to reduce debt does not get you closer to that goal. To achieve that goal, your fastest route is to use leverage in an intelligent way.

 If you just bought the place, then I'm guessing you got an interest rate at or below 4% fixed for 30 yrs. That is a historically low rate. So from a strategy of maximizing your ability to leverage, this allows you to keep as much money as possible free to buy more investment properties. 

A couple options not listed above would be:

1. If you want your investments closer to new home, then sell the Central FL home and use the $350k as down payments buy multiple cash flow positive investment properties in whatever market you deem the best area close to you.

2. If you want to keep the FL home as your first rental, then do a cash out re-finance in an amount that ensures the home is cash flow positive. Use the money, (I'm estimating you could pull out at least $200k) to buy multiple other rental properties in whatever area you determine would be the best rental market for your situation.

The more rental properties you have, the more you mitigate your risk.  If you have one property and it goes unrented then your occupancy is 0% and paying the mortgage is difficult.  If you have 4 properties that are all cash flow positive and one goes unrented, then you have the cash flow from the other 3 properties to pay the mortgage on the 4th. 

If I was in your situation, I would use the equity in the FL home to fund more rentals and diversify my risk. ( and lock in more historically low interest rates).

@Jason Eberhardt.

Most banks consider investment properties higher risk because buyers are more likely to walk away from the asset than someone living in the house. Therefore 15% down is typically the best case scenario, and that depends on credit score and other debt to income ratio requirements. 

Fannie Mae has a HomeStyle loan, similar to the 203k, that allows for the loan to cover repairs/imrovements on the property as well. 

Hi @Jason Eberhardt.

As long as you're planning to live in the house, you will be able to use the 203k program. Let me know if you need more detailed info on the purchase you're trying to make. 

Hi @Ed Fitzwater 

Welcome.  I grew up in Denver and my Mom and sister have since relocated to Vegas so I've spent lots of time in both of your cities.  Are you doing any investing/flipping in Vegas?  I grew up in Aurora and believe there are some areas that still have upside near the redevelopment that has happened around Stapleton and Fitzsimmons where the new CU Med Center and Children's hospital is located.

In Vegas, I'm intrigued with what will happen to the Downtown area based on what Hsieh is doing with the Downtown Project.

Let me know if you have any questions about Denver or have suggestions about interesting places in Vegas to check out when I'm in town.

I have the opportunity to buy a portfolio of 19 homes in foreclosure from a bank in one of the markets where I'm investing in Tennessee. The bank was asking $600,000 for the homes individually so I offered to buy all of them for $485,000. I believe the value of the homes is about $700,000. 9 of the properties have renters that are generating more than $5,000 in revenue. I've seen the inside of all the empty properties and the outside of the ones being rented and estimate the repair costs will be in the $300,000 range which will bring the ARV to $1,100,000.

I estimate I'll need about ten months to get all the properties rehabbed and rented. At that point the homes will generate about $12,000 in rental income and using the BRRR method I expect to have about $6,100 in monthly financing costs. I've got a good contractor and property manager in TN so I'm confident on that side.

One risk is that the houses in this market aren't extremely fluid. I'd like to sell some of the properties, but I'm not sure how quickly that will be possible. Any thoughts or advice before I put down my EMD?

Hi @Paul Briceno.

The basic crux for delayed financing is that you need to be able to prove that you paid cash for the property and no financing was used for the purchase. If so, delayed financing works the same as a cash out re-fi of up to 75% of the purchase price within 6 months of the purchase.

You will need to ensure you meet other guidelines as well, but this is the primary hurdle.

Welcome to the BP community.

Have you read Investing in Apartment Buildings by Matthew Martinez?  I picked it up based on a recommendation from one of the BP podcast guests. He makes a number of suggestions on how to find off-market multi family buildings.  Including reaching out to property owners of buildings you would want to buy. Networking with a variety of people in your market is another suggestion of his, but sounds like you're on the right track to find alternative ways to find the deals you want.  

Welcome to BP community Jim.  I'm joined a week ago and have get great value from the forums and tools. 

Hi John.

I'm also new to BP.  I grew up in old Aurora (adjacent to what I think is considered North Aurora) and believe those areas still have lots of potential.  As the development spills over from the Stapleton, Lowry and Fitzsimmons redevelopments, I think those areas have upside. @Scott Trench, I'd be interested to hear what pockets of Aurora that have piqued your interest.