All Forum Posts by: Michael Phillips

Hey team,

Old new investor here.  I purchased my first and only property (a top/bottom duplex in Echo Park area of Los Angeles) back in 2018 with the intent of house hacking.  I obtained a Jumbo residential loan at 4.25% for around $730k.  The purchase price for the duplex was $1,032,000 and I had a sizable down payment and also put in around $100k into bringing it up to speed.  I moved into the top unit and rented the other for $3k.  After a year I moved out into an apartment closer to work for $2k and then rented out my unit in the duplex for $3k.  Things have gone well enough so far, consistent tenants, the cash flow has been enough to cover expenses and stock away a stash for larger repairs.  
However...  the rates for refi right now if I understand things correctly would take my loan from $3,500 down to potentially $2,400 which obviously would be huge. I do not believe I can get a residential while not living in the building at this point but as fate has it one of the units is opening up and I am thinking it would be a good idea to move back in so I can legally refi as a residential loan.

My long term goal is to hold this property long term and eventually leverage to buy further properties but not necessarily live in it any longer than I have to in order to conform to loan expectations.

Questions are...

1. Are my basic assumptions around the value of this refi correct?

2. How long do I need to be back in the unit before I can apply to refi?

3. What proof will I need to provide to establish this?

4. Any suggestions as to where to go for this type of refi or specific products I should look into?

5. Are there other refi options without moving back in that would make sense as well?

6. LA real estate feels to frothy at the moment, but would it maybe be wise to use this moment to do a cash out refi to leverage the value add I made after the initial purchase and use it to add something else to my portfolio?

Thank you everyone!

~Michael

Just curious, is this application for a primary residence or investment property?  Those are killer rates if investment...

Hello everyone,

I have a duplex in LA country that I purchased with a BOA loan as a primary residence.  After an extensive remodel I realized I could rent the unit I was in for more than I would pay to rent a unit for myself in another part of town and moved out.  Given the rate environment (I am at 4.25% for 30 yr fixed jumbo $695k remaining with estimated house value around $1.15m) I am interested in in doing a cash out refinance.  

My question is if I should move back in (the upstairs unit is opening soon) to be able to get a residential rate as I am unsure what the rate would be as a loan for an investment property.

Still very new to all of this and apologies for missing any obvious answers here.  Any and all help is appreciated!

Best,

~Michael

Hey everyone, I have a purchase conundrum on my hands... I currently have a 2 unit duplex in Echo Park CA that I purchased in 2018 for around $1 mil, renovated for another $75k. It has been fully rented at $3k per unit for a year now, I manage it myself and things feel somewhat steady. Both of my neighbors are rental properties and one of them is going on the market next month. It is a SFR for around $600k that is renting around $3k like my units and will be delivered vacant and in updated condition to the buyer. I was planning on purchasing another property next year but am wondering if this might be something worth stretching for. It of course depends on final sale price, actual condition, etc... but it seems like there could be value in having properties that share a fence line from an oversight perspective and event in the future potentially an exit opportunity (especially considering my current property has two APNs with the house on one and backyard on another). Is there long term value in locking up three contiguous lots or should I wait until I had planned to jump?

Hello everyone, I am coming up on a year with the first tenants in my duplex rental property located in Echo Park in Los Angeles.  I have two renting the bottom floor that signed Oct 1 2018 and one in the top floor unit that signed feb 2019.  Given that the first unit is coming up on the end of the lease I want to make sure I handle the transition well.  The unit goes for $3,050 a month and the tenants seem to be pretty happy with things, we have a decent line of communication ( I am self managing the property) and I have been responsive to concerns and proactive on repairs.  

My main question is if I need to have/should ask them to sign another year long lease or let it lapse into month to month. I would like to bump the rents and given that the property is rent controlled with me paying one utility I can increase 4%.  Any tips on how to approach this with tenants?  My landlord (I rent in down town) only does month to month and I get a notice every year just slide under my door with the increase on it.  I have zero appreciation for my landlord however and would like to set a better precedent.

Any tips on how/when/what to communicate to these guys?

Hello everyone, looking for some BRRRR advice for a first time property owner. I purchased a fixer duplex in Echo Park in Los Angeles a year ago at $1.03mil with 30% down 4.25% residential loan. I went through a painfully expensive rehab but it is now more or less up to speed and fully rented out with each of the two units collecting $3k a piece monthly for a total of $6k each month. I had planned to get the units to this point and become comfortable with the process of managing a rental myself for a few years as I had anticipated mortgage rates going up and did not want to try to run before I could walk. Now I am hearing about mortgage rates potential dropping below even my 4.25% and am curious if I should reconsider my caution and do the "Refinance and Repeat" part of the strategy. I am unsure how much value has been added by the remodel but it is in significantly better condition and collecting market rate rents, all of which looks great to banks for a refinance right? Would I get less preferential rates now that it is fully rented and not my primary residence? Would the short amount of time since the original loan cause me to loose too much value to the costs of refinancing? Any thoughts on this would be appreciated.

I am in a high fire hazard zone on a hillside and the dropping fronds are close to lines unfortunately...  Sounds like I should just knock this out.  Anyone have this done and have a rec that will service Echo park?

I received a letter from the City of Los Angeles regarding brush clearance for 2019.  It lists what needs to happen in terms of clearance by April 30th and I think I am good all except for maybe a palm tree that is in my yard.  It definitely has some dead fronds on it but Waaaaay less than the ones in the median across from my house that they city maintains.  Does anyone have experience with these inspections?  Any good suggestions for palm tree trimming services?  The first fine looks to be around $250 and if it is not fixed in two weeks it jumps to $1,100?!?   Now I know why people are moving to Texas...

I just finished a remodel for a duplex in Echo Park and had a Rheem RTX 13 electric tankless heater installed in each unit.  Working great for the downstairs unit that only has a shower in the bathroom but the upstairs unit has a tub and this heater cannot keep up.  I need to install new unit but it does not look like I have the power for a larger electric unit which means I will need to install a gas tankless.  I have a gas line for the dryer that seems reasonably accessible and is near where I would want this unit installed.  The only quote I have gotten so far however is for $5k and that does not even include the electric or patching work.  Is this reasonable?  It seems pretty over the top.... Does anyone have suggestions as to how much this should cost  and any suggestions for someone to work with that can service the Echo Park area?

@Shiva Bhaskar thanks for the tip, I'd love to track down that app to take a look.  I recently moved out of my own duplex as I found a place to rent for myself less than I could rent out my unit so it might be time to find a PM as I am no longer there full time