All Forum Posts by: Robert Hooks

@SpencerCornelia Thank you for your response. I am not worried about the interest amount maybe I typed that incorrectly... Your last paragraph is the direction I was inquiring about. I did not really think about the debt service side of it which is one consideration and yes more risk with the vacancy being at a higher cost.... I think that is what it comes down to but I'm just thinking it would be nice to have this paid off quickly and with the cash flow it brings in that option is there.

Hello,

I have a question about a situation I am in and I am trying to weigh the pros & cons.

I currently own a 4 unit property that has approximately 25 years remaining on the 30 year fixed loan @ 4.375%.

Current payment is $2789/month before taxes and ins. Current gross monthly income is $6500. Over the remaining life of the loan I will have paid around $350k in interest. (I understand the tenants are paying the interest but then what do I do with that cash flow)

*IF* I am able to refinance to a lower rate in the mid 3's by moving in and doing an owner occupied 10yr fixed loan, what are the benefits, or what math should I be running from the investment standpoint that would help look at the benefits/risks of the leave it alone scenario vs refi? Also are there any tax benefits to paying it off earlier?

With the refi I would only pay somewhere around $90K in interest.

The property is a 4 unit that currently carries itself if two of the units are rented.

Any thoughts or strategies on how I should be evaluating this, or if I should be thinking about using the cash flow as it stands another way, would be much appreciated.

Best,

Rob

Thank you Harjeet for the reply. This property has very strong cash flow and I own three other properties that all have decent cash flow too. I hear you on the DTI point but from a valuation/time value money/smart thing to do question I am still not sure if there is one way I should be looking at this.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $750,000
Cash invested: $137,500

4 unit property - Los Angeles.

How did you finance this deal?

I had been seasoning some borrowed money from a family member in my bank for about 6 months so I bought it and then once the loan was sold off I converted $150k of the down payment to a 2nd mortgage so I actually only put $25K down of my own money originally. I have since paid down $100k of that second.

How did you add value to the deal?

Rehabbed units and raised rents.

What was the outcome?

Still going...

Lessons learned? Challenges?

Its an old building built in 1924 so their have been quite a few repairs but the cash flow is pretty fantastic so its still worth it.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $950,000
Cash invested: $210,000

Triplex. Bought and moved in for owner occupied loan. Currently worth approx $1.5M as of Feb '19.

What made you interested in investing in this type of deal?

Was able to buy it well under market value through a trustee.

How did you find this deal and how did you negotiate it?

I had been tracking this deal for a long time through family and was able to negotiate a deal prior to it coming to market.

How did you finance this deal?

Traditional. 20% down.

How did you add value to the deal?

Renovating the units and raising rents as they turn.

What was the outcome?

Still living here so will have to get back to this....

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

John Hooks - real estate appraiser of 30+ years in the South Bay of Los Angeles. His company is Hooks & Associates.

Hello,

I have a question about a situation I am in and I am trying to weigh the pros & cons.

I currently own a property that has approximately 25 years remaining on the 30 year fixed loan @ 4.375%.

Current payment is $2789/month. Over the remaining life of the loan I will have paid around $350k in interest .

*IF* I am able to refinance to a lower rate in the mid 3's by moving in and doing an owner occupied 10yr fixed loan, what are the benefits, or what math should I be running from the investment standpoint that would help look at the benefits/risks of the leave it alone scenario vs refi? Also are there any tax benefits to paying it off earlier?

With the refi I would only pay somewhere around $90K in interest.

The property is a 4 unit that currently carries itself if two of the units are rented.

Any thoughts or strategies on how I should be evaluating this, or if I should be thinking about using the cash flow as it stands another way, would be much appreciated.

Best,

Rob