All Forum Posts by: Nathan M kiefer

fix and hold and lose a little for a while, while paying down debt, then refi out and keep the asset. theres no way i could take a bath like you are considering. I agree what others have said sweat equity it and do what you can hiring out only what you have to in order to take the shortest straightest line to cash flow coming in.

by the time you sell this thing you will have 2-3 more payments out the door as well.

its clear to me, they both hurt but the option to hold will recover...some day.

so you either set yourself back for a couple years losing and paying on a property you dont own or a little every month on one you do that will eventually have upside, unfortunately if i was in your position i would look in the mirror and say made your bed- lie in it.

0 Votes

Quote from @Chad Garcia:

What are some strategies you recommend to avoid Saturday check-in or check-outs splitting the weekend?

My thought was to block Saturday check-in/check out up until a few days before that date, allowing me to capitalize on bookings that may include the Saturday. Then opening it up last minute (within a few days) for check-in/check-out if it’s still not booked. PriceLabs doesn’t have this feature currently but they told me it’s likely coming.

So I’m considering blocking Saturday check-in/check-outs entirely.

What are your strategies or restrictions to avoid weekend splits?

We do 3 day minimum and it fills just fine and solves your problems for the most part

3 Votes

Tampa, Florida

I've done this before and this is how i did it. I knew the property was going to perform well- all the boxes were checked. I also paid cash and we were apart 50k from what the appraiser showed and what the owner wanted.

this was an off Market deal, I negotiated a 3 year 4% loan with the seller and. Closed the deal.

if you are smart you will still do the diligence if your paying cash including an appraisal. I have 375k into the deal, rented the property for two years at a 140kgross and will pay the owner off that note in about 11 mos.

the property is now around 650-700k.

depends on your situation but for the nominal difference your talking I say go for it but if you're leveraging the upfront you need to cash in the overage for the appraisal and vice versa if your cash up front then have the seller carry a note

from my experience- it also shows that the seller believes in the project by doing so

if they won't carry a note separately id potentially walk but thats because we do mostly cash deals and the inability of them to believe in what I am willing turn me off to the deal when your talking about this gap

0 Votes

Quote from @Jon K.:

Trusting your numbers, it sounds like the current value of the property is around 155k if not less. That's 250k minus 88, factoring in some closing costs. And that's not including any kind of margin. Most BRRRR investors will want to be all in for 75% to 80% of the ARV, flippers will want a similar or greater margin. Reality is seldom so absolute so all of those numbers are not necessarily perfect but that's likely the gist of it.

Some other things to consider: Is your scope of work appropriate for rental grade? Do you have to do everything you plan to do to get fair market rent? Compare what you planned to what other similar rentals have in the same area to make sure it's all necessary. Pay attention to what finishes they have.

As far as cash flow goes, it's subjective but $2,500/month meets the 1% rule for a property valued at 250k and is generally not bad. If you're 80% leveraged that's a 200k loan. At 7.5% your monthly payment is around $1,400 not including taxes or insurance. I have no idea what they are for your property so I used $2,500 and $600 respectively which takes it up to $1,650. Using 15% of gross rent to cover maintenance, capex and vacancies and you're left with $475. Again, I had to do some guesswork and rules of thumbs here but it may cash flow decently if you dig into the math.

So what can you do? Sell it for a substantial loss: maybe 80k? Or put the 88k in, refi out of the HML which requires you to come out of pocket quite a bit of money as well, and hold it long term which on paper may eventually make you whole. There's also the option of sweat equity if you don't have the capital to pay for the remodel: In other words, buy the materials and do the work yourself over time. The downside to this of course is that it will take a lot longer and you're still paying for the HML.

Is it listed with an agent/realtor? If so, what is their opinion of the current value?

It is very curious to me that the lender lent you so much on the property without doing any due diligence of their own. I don't believe that this is a lender that just wants you to default so that they can foreclose and take the property themselves because that doesn't make financial sense for them if the numbers I put at the beginning of this reply were anything close to accurate.

Doesn't make sense with the lender but we will see if it happens.

fix and hold or lose your shirt and sell as is. That's where this is at for sure

1 Vote

Quote from @Jesse Rodriguez:

Quote from @Nathan M kiefer:

Double down and fix it nice to sell but don't over improve.

selling a headache will only give you a bigger headache that you'll need a aspirin the size of a hockey puck to overcome.

There are no shortcuts when you get into this situation that end well for you so put the work in and maybe you will make a buck?

My concern is because it’s a triplex, I’m limited to sell to another investor. I thought about improving a little but my hard money lender guy said don’t even bother putting any money into it.

Sounds like a hard money lender that wants to take a property from you when you default.

There's a lot of issues here starting with a guy that will loan you money and once it gets difficult wants you to abandon ship- red flag.

There are a lot of unknowns here but trying to dump it seems like a 100% guarantee to lose money.

1 Vote

Double down and fix it nice to sell but don't over improve.

selling a headache will only give you a bigger headache that you'll need a aspirin the size of a hockey puck to overcome.

There are no shortcuts when you get into this situation that end well for you so put the work in and maybe you will make a buck?

2 Votes

Quote from @Daniel Hwang:

Hi,

I'm looking to leverage my first property to purchase a second property. I understand there are specific methods like cash out refinancing, HELOCS, and equity loans.

If I take those out like a HELOC how do I actually pay that loan back as I'll still have a monthly payment for that loan? Any advice would be greatly appreciated. Thank you!

If your doing anything close to this tye property better be a 100% home run .

Otherwise, we didn't do a portfolio loan until we had 5 houses and supporting tax returns and did everything cash up until then.

i wouldn't do it until you have some track record before jumping into leverage and a heloc is made to use and pay off quickly. Long terming it, especially in this economy, isn't wise

0 Votes

Quote from @Jared Knudson:

I reside in Utah. I am considering investing in or near Orlando, Florida, in a Single Family Property, below the median in a high demand area where there are lots of people moving to. I have less than a decade worth of Real Estate Investing experience. I have multiple properties under Lease Contracts at this time, and am looking to grow my portfolio in the top markets in the United States. Looking to build a solid and reliable team to help me out. Any suggestions for locations are much appreciated. Thanks in advance!

Check out ocean lakes south Carolina, we have two there. Orlando is grossly oversaturated but some still do well there that set themselves apart but it's a high bar to be different to drive the higher bookings.

0 Votes

Ogden, Utah

We are also a builder as well as str, ltr investor; old school physical measurements and calculate yourself. We have been successful in getting this overturned.

we upload our measure into our takeoff software and check with digitize it and can present that to the bank, appraiser or whatever is conflicted. There is no way to refute afterwards, this is the best way to revert it, of course unless you are wrong about the footage and the footage reported is accurate.

99.99% of the time the inaccurate information is due to a lazy appraiser gathering that information off of some old public information.

0 Votes

Houston, Texas

Quote from @Mohammed Milord:

Quote from @Nathan M kiefer:

Quote from @Mohammed Milord:

I am thinking about using gap funding for the down payment on my first rental property as a buy-and-hold investor. I don't have any money saved up but don't want that to hold me back from getting started in real estate investing. I want to ideally find an off-market single-family property as my first deal using g this strategy. Would that negatively impact my ROI? I'm not interested in seller financing as an alternative because I'm an introvert and not very good at sales. Is this a wise move? Is this strategy even possible???

Save your money, investing as you described is a falacy in REI. While possible to do after you have many properties where it can be paid off quickly I would not recommend doing it out front.

using this method to circumvent saving cash will only lead to over leverage and a false feeling of investing to slow you down later

@Nathan M kiefer What do you mean by over leverage?

Gap funding usually requires collateral and or pledging of other unrelated assets.

i don't like leveraging those items and are typically a oxymoron because if you have those assets and dont have cash you essentially get into a leverage position you dont need to be in.

having a asset that can be pledged for a gap loan without cash to me is kind of an oxymoron in itself

just my opinion.

1 Vote

All Forum Posts by: Nathan M kiefer

Nathan M kiefer has started 11 posts and replied 345 times.

Post: Flip/BRRRR going south, seeking help

Post: Saturday Check-In / Check-Out Strategies

Post: Would you pay above appraised value?

Post: Flip/BRRRR going south, seeking help

Post: Flip/BRRRR going south, seeking help

Post: Flip/BRRRR going south, seeking help

Post: How do I leverage against my current property?

Post: Looking to invest in 3rd out of state Rental Property

Post: Appraisal came back with 10% different SQFT than listing

Post: How does everyone feel about using gap funding as a buy and hold investor?