All Forum Posts by: Bobby Paquette

 I get 90% of me deals from wholesalers, so I do not submit offer, I can get as many as I want. Holding off, why?  

Hello, I am a new member on BiggerPockets platform. I am interested in the best city for rental properties- that brings in decent/ good cashflow and appreciation somewhat. I am kind of stuck with Ohio. I don't know what's best Cleveland OR Columbus. Need some clarity on this one 

Hi I have a multi-family2 unit property in Houston, Tx . Not sure what or if I should do anything. I use one side for an airbnb myself. I rent the other unit out. I have a renter, the gentleman that was listed is in his 70s. I thought it was strange for a 70 year man to want a 3 bedroom 2 bath unit with all of the bathroom being on the second floor. I rented the place to him because he met the requirement for the rental income. I have since notice that he had not once visit the property (a younger couple comes by) and I now see the unit listed on airbnb. In the lease agreement it states the property is to be use for personal use by the renter only. I will say that the unit I placed on airbnb does not make more than what I could rent the unit. I am concern that my unit will have to compete for listing on airbnb with a unit I plan to rent out. Should I say anything to the renter or just let it be as long as they pay the rent every month. I plan to stop airbnb my unit next soon and likely will rent it out. 

I'm a self-employed real estate rehabber doing BRRRR for the first time. I do not have a W2 full-time job this year. When it comes time to do the last "R" or refinance with a traditional bank to pay off a hard money loan, would I need a W2 fulltime job to get the lowest possible interest rate and lowest monthly payment from a traditional bank?

I agree with Henry.  I have never done a deal in 26 years that didn’t cash flow.  And I’ve never bought a cash flow by putting more down to get there.

I have a GREAT, I mean GREAT commercial broker who works directly with my banker to qualify properties before my decision is made.  They insure i make a cash flow to meet my needs as well as anything the property requires.

Don’t let anyone tell you different.  It’s all about that cash in your pocket at the end of each month after all the bills, including debt, is paid.

Typically a commercial lender will require 20% more rental income than PITI - this is what's called DSCR Debt Service Coverage Ratio and should > 1.2

The properties I bought this year in Milwaukee needed 30% down to get to a 1.2 DSCR. While I don't like how much cash it takes, I am not exactly upset about the cash flow. The last one was 250k and $1950 in rent.

I used to buy really rough properties and BRRRR them, but in our current hyper low inventory situation the market does not give enough discount and I'd rather buy move in ready properties and save myself the 6 months of trouble and let market apprciation drive equity.

If you find one that generates equity, definitly go for it, but the issue I found is that you can only make this work if you deferr needed repairs (like squeezing another 3 years out of a roof) - we do everything up front and that means higher rehab cost.

Hello all! 

Newbie here and I am in need of some advice and guidance. My current residence (3bds 3ba) was an inheritance from my father.  The property is paid off and probate is finally over. Originally I had wanted to use it as a LTR but am now considering selling it as that would fund more real estate investment opportunities ( according to my realtor friend it should sell for approximately $237,000). It needs some updates and minor repairs and I have $30,000 personally I am willing to put into if it makes sense financially to do so. Math and numbers are not my strong suit, so can someone help me figure out which option of the two makes more sense? 

Bobby, when I'm analyzing properties, I do consider properties with 0 or even slightly negative cash flow.  This CF is after all expenses, including 15-20% reserves for vacancy, maintenance and capital improvements.

If the CF is negative, then I would need to set aside $X for reserve. The reason I allow this in my analyses is because setting aside $4000, for example, to cover reserves until my rent increases catch up is cheaper than going with the lower LTV loan.

I also will try to pull as much money out of the deal as possible. The reason for this is the ROI on the appreciation and mortgage paydown is multiplied by the amount of leverage being used. For example, let's say appreciation is 3% and mortgage paydown that year is 2%, and I only have 10% of my money in the deal. The ROI is 5% x 10 = 50%. If I left 20% of money in the deal, the ROI is 5% x 5 = 25%.

In my analyses, the ROI of the appreciation + mortgage paydown (i.e. amortization) outweighs the ROI I'm able to get on the CF using a lower LTV refi loan.

With that said, I would not consider going with 0 or negative CF if you don't have any enough money set aside to cover mortgage payments for roughly 3-6 months.  If for some reason you don't have tenants for an extended period, you need to be able to still make those payments.  So, always consider your personal situation when deciding your investing strategy.