All Forum Posts by: Michael Hutchinson

So I get out the army in 15 months and am trying to get a investment property in the Charlotte area. Right now I was thinking about a multi-family property. But the market in Charlotte right now is expensive and doesn’t t net cash flow with long term rentals. So I came here looking for some ideas about how to get in the market and how to net cash flow?

Cole - you'll struggle to find much small to mid-sized multifamily that cash flows in Y3, let alone Y1, in Raleigh. Trails Corner Apartments in Raleigh, a 57 unit C-class value add just sold for $9.975M ($175k/unit) at a 5.3 cap. Earlier in the year, a B/B-, 24 unit stabilized apartment with some rent increase opportunity on the NE side of Raleigh up Capital Blvd between 440 and 540 sold off-marketfor $4.56M ($200k/unit), presumably around a 4 cap based on my underwriting. Would have probably gone for over $200K on-market. There are opportunities for off-market buys in the 10 and under space especially if you're a cash buyer and can buy a value-add. The other issue is that we've worked off-market with owners to either buy or list their units, and everyone's seen such explosive growth in rent and value, that there's no point to sell...many refinanced during low rates and are now in a position to never have to sell.

Greensboro and the greater Triad market (High Point and Winston Salem, and even Thomasville and Lexington, included) are much more cash-flow markets than the Triangle (Raleigh/Durham). With that being said, the secrets out on the markets and between OOS investors and Private Equity, our Triad prices have shot up in line with Charlotte and the Triangle. Value-add is generally all you'll see come available on-market. We just had a 12-unit, C-class value-add hit the market at $75k/unit, and went under contract in a week, so there's high demand from buyers. Should sell around a 6 cap. Easy cosmetic renovation and rental demand is through the roof for affordable/workforce housing. B-class will trade off-market north of $100k/unit and generally be 24s or 32s (3 or 4 x 8-plexes was the name of the game for developers for a while there). A-class and anything that's a large B-class complex is almost solely off-market to institutional. All of that to say - there's great opportunities here to buy cash-flowing stuff and take it up a level in repositioning.

Happy to send you my analysis of the 12-unit that recently came and left the market. Let me know if you do come down to either market and I'd be happy to show you around.

 Thank you for the advice, Eliott! That is definitely a mind-set I need to adopt and would benefit from

Most recent one I closed was 6.25% no points. 80% LTV

Make sure you're talking to a portfolio lender that will actually hold the loan on their books. You will get much better rates. 

You have to make sure you are comparing apples to apples. If a loan is closing this week is was likely locked in for at least 2 weeks. The overall mortgage market has been going up for the last 3 weeks or so. So, your base rate is going to be higher then someone else with the same profile 3 weeks ago. Also, you are buying a 4 unit vs the poster stating she is closing on a SFH (single family home). 2-4 unit have higher rates then SFH due to what are called loan level pricing adjustments (LLPA) if you see below a 2-4 unit has a negative price adjuster depending on how much down. Bottom line is you should compare your offer with other brokers to make sure you have the best deal on YOUR deal, not other deals that might not match yours.

Fannie Mae LLPA matrix

 It will be treated differently if this is a primary or an investment property. 

If it's an investment property, I personally have not found a lender that will do anything less than 20% down. 

I just purchased an investment property for $91,250 with 20% down on a FNMA backed loan at 7.625% interest and was charged the following:

3.909% loan origination: $2,854

Appraisal management fee: $85

Processing Fees: $800

Underwriting Fees: $850 

Appraisal Fee: $525

Credit Report: $120

Final Inspection: $150 

Total Lender Closing Costs: $5,384 

**this seems absurdly high on a $73,000 loan. That comes out to 7.37% (and we haven't included attorneys fees in this)

Is this what I should be expecting to pay on these type of loans, or do I need to find a new lender?

Thanks BP!

Looking to buy a small multi family this year. Which would one recommend for a FHA W2 job.thanks in advance

The lenders that I have come across have all asked that my fico be at a 680 or above to start doing business with them. I was trying find out if anyone knew a Lindethat was willing to work with a 640 score 644

I totally agree with @Josh Green. We started this company prior to the last crash when we saw it coming. I'm not seeing the same indicators that we did the last time...particularly in the Tampa market. I think you'll see issues in markets like NY, Chicago, and parts of CA where people are leaving in droves, but there is a huge net migration to Tampa. Couple that with the a low amount of housing starts relative to net migration to the area and I can't see a drop in prices in this area for the foreseeable future. It's simply low supply with higher demand. Our applications have dramatically picked up in the past 30 days. Mortgage rates are driven by the bond markets...particularly the 10-Year Treasury and not the Fed Funds rate (that will impact HELOCs directly, but won't directly impact the 30-year fixed-rate mortgage). I think inflation is a different issue and has primarily been caused by government overspending, government borrowing, and the amount of currency in circulation (M2...see St Louis Fed numbers). With so much currency now in circulation, prices have to go up...that's Econ 101. In 1990, there was about $3.2 Trillion in circulation (seasonally adjusted). In 2010, it was at $8.5T. By Jan of 2020, we were about $15.4T but that dramatically jumped to $21.7T just 2 years later in Feb of 2022. When you inject that much money into circulation, you get inflation. That's basic econ. That being said, real estate has almost always outpaced inflation and a market like Tampa, at this time, might be one of the best places in the country to own real estate. Sorry for the long winded diatribe.