All Forum Posts by: Melinda Pajak

@Calvin Lipscomb We were looking at loans about four years ago. The loan we were shopping around for was only for $350k on a commercial property. It was too low for them to fool with. Yes, we need a better tax professional who may be able to help with some of these scenarios and help us walk through the tax ramifications of each one. It seems to get so complicated. And I just worry about carrying around so much debt. Is that old-fashioned of me?

@Kevin Fox Yes, assessment of our property would be a good start. We would like help with that. Can you direct message me your contact information? That would be great.

@Lee Ripma Thanks for your input. The value is fairly high. Your comment and the previous ones are opening up my eyes a bit to the possibilities--taking out a 10 year fixed loan and and using the money to invest somewhere else and do the repairs that need to be done. Then refinancing again at the end of 10 years. The rate of 4.5% is great. I calculated our cap rate using the formula with the sale price for the property. Is that correct? If so, I calculated the cap rate yearly for the past three years and it ranges from 9-12%. Is that good? (Can you tell I'm new at this?)

With leveraging out money from the property, I have two questions. Don't we lose profit when we keep refinancing to the bank fees? How do you know when it's still worth it to do so? AND, don't we want to own the property free and clear when we are retirement age so we can just collect the rent to fund our retirement? I thought that was the goal of a lot of investors.

@Dan H. - Thanks for your response. I will look into local banks and/or credit unions. That's a good suggestion. I'm a little conservative on what I want in a loan meaning I'm a sucker for a 30 year fixed. 

@Ellis Hammond - I have never heard of debt from life insurance companies. I would have to do some research on that. Thanks for the suggestion.

Thank you, Dan, for your response. I was hoping you would chime in as I've seen your responses elsewhere and you are from Poway. The only problem with taking money out of the rental property is that it is a 5-unit so that means it's a commercial loan. You just can't get great rates on those especially when the amount is so small. Most banks don't want to deal with that. 

An aside...It's nice to know that the ROI in San Diego is so high. We also took advantage of another tax break when we got the property historically designated (it was built in 1891) just after we bought it.

Do you know any banks willing to lend on a 5 unit property that won't just give us a balloon mortgage (30 due in 10) interest only thing? 

Thanks.

Thanks Dave Foster. Yes, I'm not sure we could find anything in the same SoCal market. And at the same time, I'm not sure we're brave enough to leave the market here to go somewhere we are unfamiliar with. 

How would you go about assessing the returns on our rental property? Are you talking Cap Rate or some other equation? 

I'm new here --we bought a 5 unit rental property in Hillcrest (San Diego, CA) for $411k in 1999. It has a positive cash flow now as we've remodeled and raised rents over the years. I manage the property and we live nearby. This is our only real estate investment property besides owning our house. It has come to a point where we need to spend maybe $100k or more to fix up the two standalone cottages at the back of the property. We are having trouble deciding whether it makes sense to try to buy an 8 or 10 unit place on a 1031 exchange here in San Diego or just keep the buy and hold strategy on this one and undertake the remodeling project. Any thoughts? 

We own the property outright but have a large mortgage on our own house (we combined both mortgages a few years back when interest rates were low but it will take us another 20 years to pay it off). Our son will be going off to college in a few years so positive cash flow would be beneficial. 

I read on some other discussions here that positive cash flow in San Diego is a dream on any new properties so does our current strategy of buying and holding still make sense here? Any thoughts are appreciated.

Thanks,

Melinda Pajak

Landlord/Owner

San Diego CA