All Forum Posts by: Mike Freske

@Mike Freske for commercial loans way to do a quick and dirty ballpark comparison is ask the lenders/banks what index they use and what their "typical" spread is. Many banks use FHLB or another index plus a spread of basis points. Best spreads reserved for best customers but you should get an idea. FHLB +2.25  is about 5.25 now.

@Mike Freske 5.75% seems a bit high.

It is challenging for lenders to quote rates in an open forum like this because there are quite a few pricing adjustments associated with investment properties. 

Cash out vs purchase has different pricing adjusters.

LTVs of 85%, 80%, 75% and 60% all have different pricing adjusters. 

Condo vs single family vs 2-4 unit all have different pricing adjusters.

Credit scors 740, 720, 700, 680 all have different pricing adjusters. 

Escrow account for taxes and insurance vs no escrow can have different pricing adjusters.

95% of BP posts asking for advice on rates don’t provide enough info for us to even provide a quote.  Just based on the adjusters that I listed above there are almost 200 pricing combinations!  

@Deacon H., yes, it's a terrible idea to plow your cash into your house in the hopes of increasing its value and using the equity. It is very unlikely that you will even see a dollar-for-dollar increase in value let alone nearly 2X.

Use the cash you have on hand, plus the equity you can pull out of your home for now and use that to get started with multi-family.

@Mike Freske most of us on here have a goal of using rental properties to secure some form of "financial independence" or passive income.  The note isn't a bad investment however it doesn't allow someone to leverage up.  Instead of investing $100k in a note, you would have $500k of RE buying ability.  That doesn't mean a $500k property will necessarily perform better than 10% but for most of us it will.  

By generating more than 10% the investment can compound and grow quicker thus speeding up the income goals.  I wouldn't say rentals are really passive investments until you hire a property manager so you can let go of the reins.  The cost to cash flow is why many of us self-manage.

As far as income goes, everyone has their own metric but many look at cash on cash ignoring principle pay down.  I don't get stuck on metrics as I have seen places with an easy 20% cash on cash return but they don't cash flow much.  To I think more along the lines of "is this worth it" to manage another place....  Making another $3k a year doesn't excite me much anymore!

Minneapolis, MN investors - would you invest in a duplex in Brooklyn Park? Why or why not?