All Forum Posts by: Ryan Ball

I agree with Bryan L.  If you think it is a good deal, put it under contract with an inspection contingency and get it inspected.  I have found a good inspector can generally give you enough info to decide if a property to decide if it worth pursuing despite a structural issue.  We have looked at several properties (even had one under contract) with structural issues that likely would not have had to have been repaired to rent them but then it would have been an issue when we wanted to sell.

I think that the local community banks offer better rates and a more logical approval process but will generally only lend to local investors.  We invest out of state so we have not been able to take advantage of that in our market.  I would suggest talking to a mortgage broker in your market as they can pretty quickly tell you what lender will give you the best deal.  We have used a mortgage broker for our last two deals and ended up with lenders I would have never thought to talk to.

I think you have to look at what cash on cash rates look like in your market.  When we first started in our market (Cincinnati) I wanted to look at all of the properties that had the highest projected cash on cash returns.  I quickly realized that virtually every property that projected over 20% was either in a bad location, was in very bad condition, or both.  Really low priced properties will end up looking great from a projected cash on cash return perspective but they are likely in an area where you will not have great tenants.  If you have vacancies, high tenant turnover and high maintenance costs the income part of the equation will never materialize.  We set our minimum cash on cash return to 10% based on our experience.

You could also do a blanket mortgage on multiple properties.  I am sure the minimums vary by lender but I have generally seen a minimum of 5 properties and a loan amount of $500k to qualify.

We inherited two section 8 tenants in a building we purchased.  They are both older, retired women and we have never had any issues.  We have to have the city housing authority inspect the units annually (no cost to us).  Aside from that, I can't think of any issues.  I think 5 kids is a bigger issue, section 8 or no section 8.  We are not seeking out section 8 but I would take a little old lady with guaranteed rent over a lot of other tenants.

I would try Griffin Fletcher & Herndon in Cincinnati (gfh-law.com). We just worked with them recently - Brian Wais is who handled our stuff.

I was just informed by our State Farm agent they will not underwrite new multi family properties unless each unit in the property has two exits. We actually have a place set to close in a few weeks that this impacts. Their rates are decent and they have been pretty easy to work with. Anyone have any companies they recommend?

We invest in multi-family properties as well. I think you run the risk of losing money when you start making too many assumptions about your revenue and expenses. I always try to do my analysis based on what the current rents are. We have used traditional bank financing for 5 multi-family properties and I have not ever had an option to do less than a 25% down payment. We are actually now at 30% required down payment since we are over 4 mortgages. Just out of curiosity why the rush to pay off the debt if you are making positive cash flow? Moving out to a 30 yr. mortgage gives you a lower payment and more cash flow. You can always pay down the debt when you want to.