All Forum Posts by: Matt Horn

Hi Lisa,

On the surface, it seems like a decent opportunity if you are interested in student housing.  As you probably know, that location is solid gold!  Since you were under a tight timeline to submit an offer, I am curious if you will be afforded an inspection period or is it more of an as-is wholesale transaction? 

I'm looking at a triplex nearby and am happy to compare notes if you decide to move forward and want another perspective!

Matt

Hello Alex,

Seems like a great opportunity with several options! Would you considering occupying the townhome? If so, it would make a lot of sense to buy it with FHA or a loan with a small down payment and capitalize on the low interest rates. Occupy the home for a period of time and then convert to a rental if you decide to live elsewhere.

If you are looking for a quick profit, the wholesale route may be the way to go but that really gets back to your investment strategy and goals.  If you are looking for long term holds, this would be a great candidate to buy as a rental.  

The biggest challenge in the Tucson market is finding good deals and you have seemingly found one, so this is an exciting way to kick start your real estate investment career!

Feel free to reach out to me if you want to discuss it further and good luck!

Great job Amanda! 

Very nice design and so much work accomplished in the $20k budget!  Good luck on the next one and let me know if I can help at all.  I have been seeing some off market SFRs come across my desk but I am focusing on multi-family.  Happy to share if you are looking for more deals in Tucson.

I like the creative thinking to re-purpose the property! I would say that the best thing you can do is to have a dialogue with your lender(s) to learn how they feel about Airbnb income. Most banks that I have spoken with are not comfortable with the uncertainty of rents. They strongly prefer the predictability of the long term leases that provide stability and capacity to repay the loan. They often times will look at the short term rentals as a transient/hotel type of underwrite and then either steer clear from it entirely or offer a lower LTV than you maybe seeking.

Hello Omari,

I think the biggest step to take is to have a strategy discussion with your lender(s). The parameters of the loan program you use to refi will dictate how much cash you will be able to pull out. I would specifically focus on the DSCR requirement and max LTV. Then you can reverse engineer the numbers to see what the NOI will need to be to satisfy the lender requirements and see how realistic it might be to achieve those numbers. And just as Rafael wisely pointed out, do some homework to understand the comps in the area so you can accurately anticipate what the appraised value might look like.

Also, make sure to double check on any title seasoning requirements the lender may have that could limit the LTV on your new loan.

Those are just some general pointers but let's dig into the hypothetical numbers you provided. This is how you might be able to BRRR...

Projected rental income: $172,800 ($200x12X12 + $144,000)

- Expenses (if they were to remain at $72k) = $72,000

NOI = $100,800

Let's assume it appraises at a 6 cap, the ARV would be $1,680,000.

Max LTV on new loan is 70% = $1,176,000 (assuming DSCR is in line)

$1,176,000 - $700,000 (orig loan amt) = $476,000 but then subtract the rehab + loan fees for both loans.

If you can fine tune the numbers with actuals and with some input from a property manager (as there are many variables here), we can clean this up but this is conceptually how I would look at it.

Hope this helps!

Matt

Michelle Cunningham at Fort Lowell Realty and Management is a great option... particularly if you are looking to renovate/stabilize a property.   https://flraz.com/about-us/

Michelle Cunningham from Fort Lowell Realty and Management. She is especially strong in the area of stabilizing a property. She has direct access to contractors on her staff so it’s truly a one-stop shop. 

@Serge S.

That post is solid gold!  So much practical information that can be applied by anyone in any market.  I appreciate you sharing your success and wisdom. 

Congrats Serge!  Were the local banks based in Tucson or Payson?  

Welcome to the Tucson market!  Let me know if I can help you guys in any way.