All Forum Posts by: Patrick Thomas Dickinson

Okay Bigger Pockets Folks 

The time has come for me to make some decisions: 

My situation: I live in Sf Bay Area in California. I own two Single Family Home Rentals currently. One in California and one in Texas Both are currently rented. I am currently cashflowing about 800$ a month with both properties. 

I just completed a Cash Out Refi on the California property and now have 200,000$ Liquid cash, as well as additional 50000K liquid cash for reserves/emergency funds etc. The lender who did my cash out said based on my dti ratio they will lend me an additional $400,000 ( currently preapproved for this) . So max I have is $600,000, although I don't know if I want to spend all of this.

My Goals:

I want to scale fairly quickly, I am 35 years old now and I want to have sufficient amount of units/ properties by the age of 45. I just started reading the multi family millionaire and learned about the stack method etc. So I am thinking my next move will be a out of State 4plex. One thing I found interesting in the book is when he talks about not scaling fast enough because your in your comfort zone. I don't want to do this. So I'm thinking large scale( 4 plex and bigger )at least within the next 10 to 15 years. 

- Have enough (take home after tax pure cash flow) from my properties to match my current w2 net income ( which roughly 7500$ to $11000 monthly)

- Not create a lifestyle where I am so immersed in my real estate investments that I cannot enjoy life. I self manage two newer properties right now that don't give me to many problems currently. So basically the less problems, the better. I would be willing to pay people to have less work and problems. Ie property management etc. 

IM REALLY MAKING THIS POST BECAUSE ITS NOT EVERY DAY THAT I HAVE 200,000 CASH IN MY HANDS. I REALLY FEEL LIKE THIS NEXT DEAL OR DEALS THAT I DO WILL BE PARAMOUNT TO HOW MUCH I SCALE IN THE FORSEEABLE FUTURE. 

MY QUESTION TO EVERYONE. 

-WITH MY FINANCES THAT YOU HAVE SEEN ABOVE WHAT WOULD YOU DO. ?

Below is my thoughts. 

Buy more SFH? I want to get bigger and create enough cashflow to replace my w2. Seems difficult in the sfh area

Buy one multifamily property or maybe even two.? Any ideas on areas where you can buy 4plexs or duplexes built post 1960 for under 300k each, I know the midwest 8), a lot of multifamily properties are old though, any areas with newer multifamily that you recommend. 

Would you pay cash for one property outright or buy multiple properties and just put down the minimum 25% and buy the rest with leverage from the bank. ? 

Anything else you care to add. 

I HAVE THE MONEY IN PLACE, I UNDERSTAND I NEED TO BUILD MY CORE 4 IN WHICHEVER MARKET I CHOOSE, I JUST WANT HERE WHAT YOU MIGHT DO IF YOU HAD MY MONEY AND GOALS IN MIND. THANKS. 

Try to be objective as possible, I understand a lot of people on here are soliciting business ( syndicators, turn key providers, wholesalers,) and will give you information that pushes their agenda not really looking for that. I'm really hoping to get some good qualities opinions about where to go from here. Maybe you've been in my spot before, please educate me, where would you put your money? 

Have you invested in syndications before. What was the  Minimum cash needed. How was your rate of returns. Any recommendations on general partners etc. I’m  Sure I can make money in a lot of places, I tend to be more hands on than paying people to find an investment and giving money to them but I’m always interested. Don’t know much about syndication educate me 

@Sam Smith my goal is to scale quickly and put good property management in place. The less headache the better for so new properties would be more ideal. Multiple properties vs one single property would really depend on the numbers for me. Some places ie the mild west I could afford a couple multifamily properties possibly other places I could obviously afford one property. What would you do if you had 50000k to spend 200000k of that being in cash the other 300k would be lending. 

@Kendall Short Is there a specific area or certain ZIP Codes that you would focus your research on I’m looking for C class or higher properties

@Brian Napierala thanks for the response Brian. I somewhat understand what you said. You have to speak as if I know nothing about the lending/ underwriting process because I basically don't. I understand max loan to value of 75%, but is there a way for me to figure the max amount most lenders would lend me based on my DTI. For example lets say

My Income 150,000 $ 

My Debt :    0$ 

From what I understand most conventional lenders will lend up to 45% DTI

with that said 

150000 x 0.45 (threshold) = 67,500 ( yearly ) divided by 12 months = $5625 ( monthly allowable debt to stay under 45%) 

SO BASICALLY I COULD GET ANY MORTGAGE THAT WOULD KEEP MY MONTHLY PAYMENT UNDER 5625$ roughly , So maybe plug that number into a mortgage calculator and get some potential loan amounts  ? am I understanding this right. 

------as long as I don't go over that 75% loan to home value threshold 

I may be way off, if so please educate me. 

I will purchasing a multifamily investment property hopefully within the next 6 months. My DTI is extremely low ( under 5 % ) I have a feeling based on my income and minimal debt that the bank would lend me upwards of a 750,000 $ or more. I have the 25% down payment and cash reserves as well. My question to bigger pockets folks is do I just ask for the highest amount that I think they will lend me. I would like to be more spot on when giving them a purchase price. Meaning I would like to ask for the most I can get. How could I crunch this number myself? Logic to me says ask for the highest amount possible so that I will at least know what I am able to obtain in lending for this transaction as well as other future deals. In previous lending transactions I have had in the past, it seems like you just throw out an arbitrary number and the bank says yes or no , but the real answer I want to know is what's the most you'll give me and not push me over the conventional lending guidelines. I know the underwriters just plug your financial numbers into a computer which probably says yes or no. Is it me or does it seem like lenders don't want to give you your max loan amount. Any lender folks or anyone have any insight on this.

@Lauren Cutchen I ended up getting 1550$ /month

Investment Info:

Single-family residence buy & hold investment in Conroe.

Purchase price: $192,990
Cash invested: $53,000

New build in Conroe Texas

Anyone care to touch on their  specific multifamily markets, more specifically are you seeing most sellers taking all cash. What are the chances of landing Multifamily properties in your markets with conventional financing and 25 plus percent down.? 

@Frank Rodrigues

any other markets you think are worth a look outside of KC?. This is probably a three month goal for me, so I want to start analyzing deals now.