All Forum Posts by: Matthew Hoffman

Thanks, @Chris Davidson. My idea isn’t so much to predict rates but rather to play around with some variables to see how the numbers could look over time. What happens if the rate stays the same over time? How does the deal look if I’m able to refi into a lower rate (say, 50, 100, 150bps lower)? Similar thoughts playing around with leases and CAPX — essentially trying to stress test how much wiggle room there is in the deal from a cash flow perspective (and potentially in terms of pulling out equity on a refi a few years down the road). Definitely not science or trying to read the future but rather to try to get a directional sense for how good or bad the deal could look in different circumstances. 

Curious to know how you might recommend approaching that (and if it’s not an analysis you’d do, then why that is).

Thanks for engaging here!

Let's say I'm looking at a deal today and want to embed my loan assumptions into the deal. Then I want to look at what a refi could look at various points of time in the future. For example, if I think rates will drop, I might like to look at scenarios where I refi at different rates at different periods of time to see how that changes my underwriting. The thought process is that if I like the deal today, I may love it a few years down the road where I can refi (whether I cash out or not) under better terms to reduce debt service.

I'm sure this is the kind of thing I could spend a lot of time trying to build in Excel -- am wondering if anyone can direct me to an existing tool that might help with this.

Can anyone help me understand the residence requirement and what kind of loan it's tied to? I'm sure someone has written about this on the forums. I'm looking at a 3plex in my area and am wondering what I'd technically need to do to meet the residence requirement, as well as whether there are any tips re how to manage those.

I'm sure folks have written about this stuff before, but I'm relatively new here and hoping someone can point me in the right direction!

The way it's been explained to me, including capital expenditure reserves above the line reflects an appraisal point of view, as compared with an investment point of view. Given that we all are coming at this from the perspective of investors, I think it makes sense to include capital expenditure reserves below NOI.

To @Kyle Lewis's point above, this won't necessarily impact cash flow, though it could impact certain investment ratios that you and your lender would consider (e.g., cap rate, DSCR, debt yield ratio, et al.), as @Mike Dymski suggested. I would think that the extent of the impact would be driven by the amount of reserves you need to set aside, which in turn would be driven by the age of the building, what improvements had been made when, etc.

Hi @Kevin Ryan, I'd love to know what you think of the February meeting! I'm exploring further REI pursuits in the area and would love to know how you find it.