All Forum Posts by: Phil Sharp

Hi @Jared Rine - my other recent post was looking for investor-focused lenders in the Denver/Boulder area, specifically ones that loan based on DSCR rather than W-2. But I'd also like to find an investor-friendly mortgage broker in the area as well. I see you are in Sacramento but let me know if you have any pointers - thanks!

Thanks, @Steve K. I will look at B2R and Lima One, as well as the referrals you sent. Do Portfolio loans have to be ARMs? And do they need to involve multiple properties? I have reached out to Aloha Capital and Merchants Mortgage, both local, and confirmed they offer DSCR-based 30 yr fixed loans on single properties, but maybe that is a different type of product than the Portfolio loans you've mentioned?

@Ryan O'Mara Can you point me to some of the lenders you're referring to? The ones I've reached out to (local credit unions and such) only offer loans based on personal income (DTI based on W-2s and tax statements) rather than DSCR-based products.

Thanks, @Steve K. I would be grateful for your referrals, even if they might not have exactly what I'm looking for. Yes, I would assume this type of loan is the main form of funding for commercial deals, but I also assumed that any SFH investor would need this type of loan at some point, once they max out at 10 conventional loans? The only other option at that point is private lenders (and seller-financing I suppose)? Or am I misunderstanding some category of loans that is common for SFH investors once they tap out of conventional financing?

I am beginning to do some single-family buy-and-hold investing in the Denver / Boulder area, and want to make sure I can find lenders who can finance them based on their rental income (usually debt coverage ratio) rather than my income (as I might leave my job soon).  I have one or two leads, but would love to do some comparison shopping.  It has been challenging to know how to search for these types of lenders (who do not need W-2s or tax returns), so any pointers would be appreciated!

I have tried my best to use the Search and Network functions on the BP website, but to no avail. Hoping folks here can recommend a mortgage broker serving the Denver/Boulder area.  Thanks in advance for any leads?

There are a lot of sites that show some type of estimated value for a home, but I haven't been able to find any that compare list price to that estimated value.  Or that let you search for house with, say, $50k or 20% difference between list price and estimated value.  Are there any sites that readily show you the difference between price and value, and let you search/filter for this differential?

@Account Closed these numbers are really helpful, thank you. Can you explain why the SFH ship has sailed, but the numbers still work for multi-family properties? Is it just that the competition to purchase multifamily properties is less? Or that valuations are somehow tied to rents more?

I am primarily interested in buy-and-hold investing for cash flow purposes.  While I certainly hope to realize decent appreciation over time, I want to quit my day job sooner rather than later and need to replace at least some of my current income in the near term.  

However, as I poke around and talk to folks, it seems like per-unit cash flows can be pretty modest - sometimes only $50/mo or $100/mo per door.  While this can become a sizeable income once you have 25 or 50 units, I'm curious what type of investment properties or strategies typically generate the highest cash flow per unit/door.  I want to replace my income over time, but ideally in bigger steps that $100 per door.  (Note I am interested in the actual dollar amounts, not percentages - $500/mo take-home might be only 10% of a $5000/mo rent, but it's preferable to the $300/mo that is 30% of a $1000/mo rent.)

What type of properties tend to have the highest cash flow per unit?  What investment strategies or tactics are most likely to maximize cash flow per door?  And are there geographies or markets that tend to produce the highest cash flow per unit?  Finally, if you have any recommended reading (blogs, books, etc) on how to invest in order to maximize cash flow per unit, I would be grateful for the pointers.

@Llewelyn A. Thanks for your detailed answer.  I agree the cash flow vs appreciation framing is too simplistic, and was hoping to solicit more nuanced answers like yours.  So, with your nine properties, were they cash flow positive in the first year?  Assuming not, do you have a philosophy about when you want/need them to be cash flow positive?  I understand your broader point that it isn't all about cash flow, but there's also a practical reality of needing to pay the bills each month, so I'm curious how you manage properties that aren't cash flowing, and for how long.

@Thomas S. I am not sure I understand your point.  Are you saying that appreciation investors can get trapped in a way, because they can have a hard time turning their equity into leverage (via refinance) due to the negative cash flow that would result?  So the only option they have to generate income is to actually sell the property (which undercuts their appreciation goals)?

@Bryan O. I would love to dig into your analysis a bit more.  Can you link me to that blog post you mentioned?

On some other threads, there seems to be an underlying debate or difference in philosophy around buy-and-hold investment strategy:  

In one camp, the goal is to invest in high appreciation areas, even though they are high-priced and might not be cash flow positive in the near term.  The idea is that the appreciation will far outstrip the relatively modest cash flows you'd be able to get in lower priced areas.  These folks might argue that, in highly desirable areas like coastal California, you can pretty much bank on solid appreciation over time.

In another camp, cash flow is seen as king, and appreciation the icing on the cake.  The idea for these folks is that if you are banking on appreciation, you are essentially speculating rather than investing.  These folks try hard to find areas that are likely to see at least modest appreciation over time, but the key difference is that they don't bank on it.

Maybe the ideal is somewhere in between, as I know it is not a binary, either/or decision. I would love to hear how different buy-and-hold investors have charted a path between these two extremes.  I have some roots and a property in coastal California and have seen the benefits of this appreciation first-hand, but the costs still blow my mind and I don't have a ton of cash to throw around.