All Forum Posts by: Randall Williams

@Joe Pitrolo, if it's still not rented, try craigslist and facebook local yardsale forums - which should have thousands of members. Many shiny happy photos and a warm friendly and thorough description should make your phone ring. 

Thanks everybody. I'm going to go explore this more - the banks I talked to wouldn't consider residential as it's not my residence. I certainly don't need to have multiple commercial ARMs all raising rates at the same time. There must be somebody out there who will do it.

Thanks Damian S. , Marcus Johnson . I'm looking at bigger buildings now - and wrestling with renovation cost math. There's a 3-plex up for $66k, but I haven't seen it yet (I'm out of town.) If I can do it for $40, then I'm in. Marcus, the ARM was 4.85 (typo) and it's all I can get on a commercial loan because it's an investment property. If there's a way to get cheaper fixed rate, I'm in - would you suggest something? Buying 2 more on the same 5/20 ARM loans is certainly a consideration if (when) rates go up significantly. Also, my bank offers to fix an additional 5 years at any time. If interest rates head up 3 years from now, I can fix for another 5, then re-evaluate before the end of that term.

Marcel Pean , good luck! I'm in a tiny market, but I can say that I buy on the 2% rule (gross rents about 2% of sale price) and expect debt service to be 50% of expenses. This only works for multis in my town. Here's a paste from another post with specifics of how I'm financing with no money down: I bought my primary residence for $168K, and paid the mortgage down like a mad dog. 5 years later, I did a cash out refi (30 yr fixed, 3.9%) for $120K, which paid off the $34K left on the note, and used the dosh to buy an $82K rental duplex. The $840 mortgage and expenses are covered nicely by $750 in rent (housemate on my primary residence) and $1550 in gross rent on the duplex.  Last month, I took $90K in a cash-out refi on the duplex, and used it to buy an $80K duplex, putting $6K into renovations (ARV $110K or better.) It's rented now at $1550 as well, on a $540 mortgage payment (4.85% 5/20 ARM.) I estimate a net return of $5K yearly on each property after expenses (thanks, BP calculator!) I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the properties.

Ditto what Preston Dellinger said. Amortization table will probably say to take the 3.5%. Good luck!

Hi,  So, I just bought a second rental duplex. The structure seems bulletproof, but I wanted to run it by y'all to see if I'm missing something - thanks for any feedback you can offer. I bought my primary residence for $168K, and paid the mortgage down like a mad dog. 5 years later, I did a cash out refi (30 yr fixed, 3.9%) for $120K, which paid off the $34K left on the note, and used the dosh to buy an $82K rental duplex. The $840 mortgage and expenses are covered nicely by $750 in rent (housemate on my primary residence) and $1550 in gross rent on the duplex.  Last month, I took $90K in a cash-out refi on the duplex, and used it to buy an $80K duplex, putting $6K into renovations (ARV $110K or better.) It's rented now at $1550 as well, on a $540 mortgage payment (5.85% 5/20 ARM.) I estimate a net return of $5K yearly on each property after expenses (thanks, BP calculator!) I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property. My question is - I plan to buy two more similar duplexes next year and repeat the same process. Anybody see holes in that plan? Thanks for any help you can offer - much appreciated! - Randall

Hi, 

So, I just bought a second rental duplex. The structure seems bulletproof, but I wanted to run it by y'all to see if I'm missing something - thanks for any feedback you can offer.

I bought my primary residence for $168K, and paid the mortgage down like a mad dog. 5 years later, I did a cash out refi (30 yr fixed, 3.9%) for $120K, which paid off the $34K left on the note, and used the dosh to buy an $82K rental duplex. The $840 mortgage and expenses are covered nicely by $750 in rent (housemate on my primary residence) and $1550 in gross rent on the duplex. 

Last month, I took $90K in a cash-out refi on the duplex, and used it to buy an $80K duplex, putting $6K into renovations (ARV $110K or better.) It's rented now at $1550 as well, on a $540 mortgage payment (5.85% 5/20 ARM.)

I estimate a net return of $5K yearly on each property after expenses (thanks, BP calculator!) I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property.

My question is - I plan to buy two more similar duplexes next year and repeat the same process. Anybody see holes in that plan?

Thanks for any help you can offer - much appreciated!

- Randall

a cash out refi of another property could get you 100% of your flip buy/fix budget. But be vewwy careful that you don't get upside down if it doesn't work out like you want.

Hi Ryan, welcome! Also in your neck of the woods is @Dave Holman, Who's after mid-level SFRs to rent. I'm in Bath, in the cheap rental duplex biz. Happy to share thoughts or compare notes, though phone's easiest these days - PM me your number and I'll text you. 

I've just finished my 50-ton, though it's more for deliveries and warm-water sailing gigs than hard sea time. Glad you found us!

@Darren Budahn  Makes sense to me, too - I'm just trying to see what I might be missing. For example, when I bought the first duplex, I paid cash, and bought outright. Had I mortgaged it, I would have had a bunch of extra cash then for several other properties. But in effect, I'm doing the same thing now by mortgaging it to buy another outright.

Thanks for the perspective - appreciated!