All Forum Posts by: Ryan Howell

@Greg Lyons - We just ventured into the 5-20 unit space after doing small MF to start. I think it is a great opportunity to achieve your goals. That said, our deals are typically off-market value add where we can get properties under value AND improve the property. We've done 2 and working on the third now....first two just appraised at ~2x purchase price giving us ~55-60% LTV on the refinance when pulling out all our initial capital...that maximizes CoC. I will say we do it local (within 1-2 hours) though and doing it at a distance can be more challenging and risky. Is there not any opportunity for these type properties in Idaho?

You do have a business to run and be aware that someone mentally unstable or not in their right mind cannot necessarily have a contract enforced against them (my understanding, but I'm not an attorney).  I would get him out and stick to your own rules.  If you can call and help him, you should absolutely do that, but don't let the situation keep you from running your business the right way.  Especially after he is out and there is no longer a landlord/tenant relationship, you may be in a better position to seek some help for him.

I've done the same thing here in Western NC - Asheville area. Biggest difference is the lending, otherwise it's very similar. This size is still smaller than what large syndicators are going after so we still deal with the same type of owners, typically local landlords who self-manage. Find a good local bank who likes multifamily. Know you'll probably have 5-10y fixed with 20-25y amortizations and won't be doing 30y fixed loans most likely. The lending will be primarily driven by your DSCR, experience and your current assets. In my opinion they are way easier than conventional underwriting if you have a solid track record which it sounds like you do. You will need to look at things from a cap rate perspective for the valuations which in my experience makes it easier to BRRRR than with 2-4 units if you do value add.

I would look into a HELOC instead of a refinance, perhaps? Maybe Penfed or another institution....there are a few that will do it on rentals. Then you keep the primary mortgage at the current rate, but can tap into the equity for the next deal.

I would look at it similar to @Taylor L., but I'd also consider the location and appreciation potential. If it is in an A+ location that you feel is going to generate substantial appreciation, I'd want to weigh that in my decision making, so I'd look at the total ROI on my investment, assuming what you think the property may be worth in the future. Also, if I understand right you have some balloon payment at some point. I'd weigh what interest rates may be at when it's time to refinance, as that could be a risk to your cash flow. Overall, unless it is a great location to hold long term, I would probably sell.

#1 - maybe...it will increase your DTI, but it does open up opportunity to access your equity.

#2 - You should be able to track this in Quickbooks, etc with your bookkeeping and allocate the interest however you need to. If you want to use your HELOC for personal use, treat what you are using for your rentals as a personal loan to your business. Hope that makes sense.

FYI - I'm not a CPA, but this is what I've done in the past.

Why not suggest she buys her own window AC units to supplement?  

@Emon Thompson - I would sell...The reason has less to do with the ROI on that money and more to do with habits and risk. Consumer debt will destroy any wealth building benefits real estate can provide, so until you change the habits that drove up the consumer debt, you will not be able to achieve financial independence. If I were in your shoes, I would probably sell the house, maybe sell the car and get a cheaper one, pay off all the consumer debt. Now your DTI is in a good position for another mortgage....then go buy something you can house hack, such as a duplex. Now your monthly expenses are significantly lower and you still own a house AND your financial risk is about as low as it can get. House hacking and driving an older/cheaper vehicle will also help to break the consumer debt habits as you're significantly altering your lifestyle. Being in a position of financial strength, you can start to take calculated investment risks to grow your portfolio that would be much more terrifying and risky when you have no flexibility in your budget and a lot of bad debt hanging over your head. I think that will position you really well to be successful.

First of all, congrats for pursuing real estate and educating yourself at this stage of life, because you will be way ahead of the game.  That said, I suggest you prioritize continuing to educate yourself, by consuming podcasts, books, etc and make networking a top priority.  There are so many investors who love teaching new investors how to get started.  The answer to your problem will be solved by networking.  I would advise you house-hack and through your networking relationships, eventually you will find someone willing to seller finance or be a private lender to help you get started.

@Cee Williams - It will be difficult. Most likely at that size property you need to carry personal liability which means you need assets. Most lenders want to see experience. Can it be done? Yes. Seller financing and getting creative, you can make this happen. My suggestion is to consider starting smaller...buy 1-4 units that is a good deal and start growing your net worth. Do that a couple times and you'll start looking more attractive to the bank. I did 6-7 BRRRR deals before I went beyond a 5 unit building. 6-7 good deals can build your assets quicker than you think and give you a lot of experience that banks will like. It begins to snowball quickly.