All Forum Posts by: Ryan Lewis

Jamie - thanks for your reply. You are correct that the numbers don't look good with a standard investment property loan, nevermind adding a HELOC payment to the equation. I'd be cash flow negative on the property in the short-medium term but I'd get to hold onto more cash and get a yield in the range of 5% which is probably not worth it when looking at ROI overall.

I like the idea of blending a HELOC + cash...or even potentially using a HELOC + more cash savings to buy a property outright, though I may need to HELOC an additional property or raise funds elsewhere if I wanted to take that route. If I use more cash that will significantly reduce reserves but I would feel more comfortable with less reserves if I didn't have a mortgage payment and only a HELOC payment on the new property. This approach obviously makes cash flow look better but would also limit my ability to expand further in the short term...unless I HELOC the new property too?

I'm additionally looking at an offset mortgage but still trying to get my head around this and if it would help. 

Any other thoughts/suggestions or ways of getting creative are appreciated!

Hi BP community - I'm an investor with 3 SFHs in the Nashville area looking to acquire my first small multifamily property (2-4 units).

I'm trying to determine the best approach for the 25% downpayment, comparing using cash that is currently sitting in a high yield savings account to funds from a HELOC on one of my properties. The amount of equity I call pull is less than the cash I have but not significantly less.

When doing this analysis it struck me that it may not be worth using a HELOC for the simple fact that the interest rate is ~9%* while the funds in my high yield account are only yielding ~5%*. So I'd be pulling equity at 9% and only get paid 5% if I used the HELOC and kept the cash in my high yield account.

I recognize there are other ways I could invest this cash (including another property) but I am being mindful of levering myself out too much in the current environment where job losses are more common in my industry (tech). I'll also want to have more reserves available the more properties I have.

Am I oversimplifying or missing something? Or, is it better to look at it on a per investment basis. E.g. - if I use my cash, the investment needs to generate > 5%. If I used the HELOC, the investment needs to generate >9%.

I recognize there are many variables not listed here but would love to hear from more experienced investors on generally how you think about using cash vs. home equity to grow your portfolio in the current environment.

Thanks!

*The HELOC rate and my high yield cash savings rate are both variable so will move with the market. However the HELOC rate will always be 0.75% above prime while the high yield cash savings rate will always be below prime of course...

Thank you Karen.

It's worth clarifying for all that I am certainly NOT blaming my agent for anything, and tried to articulate as such in my post. I'm simply just considering if changes should be made or not. 

Thank you all for your posts, great food for thought. Wishing all a Merry Christmas.

Hi BP community. I've been struggling with something recently that I was hoping to gain perspective on from those who have been there and are more experienced than I.

I've been working exclusively with an agent for the past ~1.5 years of my real estate investing journey. She's been great overall and has epitomized "trusted advisor" status, finding and helping me close on 3 SF properties in the Nashville area. 

The past 6 months have not been so great however. I switched my focus to small multifamily and have asked for help again, but she has not sent me one small MF property to view. Instead, I've sent her several small MF properties over this period and asked for her perspective. She has provided this along with virtually showing me the properties when appropriate (I'm out of state), which have resulted in 3 offers but none accepted. 

I don't blame her for the offers I made not getting accepted, but I would really like her to be more proactive in sending me small MF properties like she once did for SF properties. Recognizing the market has heated up substantially since we first started working together, I'm not sure if I should chalk this up solely to that or if she is simply just not very interested in helping me land my first small MF deal.

A few things I do know from trying to feel this out with her myself is that she personally favors SF properties over small MF properties, and seems to be constantly busy working on larger deals for wealthy clients buying in the $1M+ range. While my budget isn't that high, I do think it is attractive enough being in the $300K-$600K range. I asked her directly if she was too busy to help when we first started looking again to which she confirmed that she wasn't.

Should I be considering a new agent at this point or is this just how things are in today's hyper-competitive market when working with an agent?

I don't want to work with a new agent, as we've built a great relationship and significant trust, but I'm also adamant about landing by first small MF deal by early Feb as I will be moving out of the country and want to offload management of my portfolio to a property management company. It is also painful watching my hard earned dollars wasting away to inflation while sitting in my Ally "high yield" savings account waiting for an opportunity.

--Ryan

Hi BP community - I'm currently working on acquiring my first multifamily property and recently started analyzing deals.

Being new to multi-family, I'm paying closer attention to cap rates than with my previous single family properties. What are ya'll finding in Davidson (and surrounding) counties as a "good" cap rate for multi-family properties in class B and C neighborhoods? Just curious as I work to better define my buying criteria.

Thanks!

And thank you all for your reply! Most especially to Tiffany for the virtual networking recco

Todd - that is great! I've new to it but I've bought two SFH so far. I got them as new builds with the intention of holding for at least 5-10 years. Both are immediately cash flowing more than what I anticipated which is nice, especially because my intention was to focus more on appreciation vs. cash flow. I'd like to buy a semi-distressed property next, rehab then rent it out. What do you have in mind?

Hi all! I'm a Californian (for now) who just started my real estate investing journey this past year by purchasing my first two SFHs in Nashville, TN. My goal is to purchase 1-2 properties/year in the Nashville area, and eventually get into other types of real estate investing as well (rehabs, multi-family, commercial, etc.).

Given that I live out of state (and Covid has limited in-person networking anyway) are there any virtual networking groups out there for Nashville real estate investors? I'm looking to meet local deal finders, property managers, contractors, potential co-investors and lenders mainly, but open to meeting others just for the mindshare!

Any recommendations would be appreciated and welcomed. Thanks in advance!

--Ryan

@John Warren thank you for your reply! I appreciate your input. Curious if it's common to work with both? My thinking is I could work with the newer agent for a certain part of my target city only, and my original agent for the remaining parts of the city. The reason is that the newer agent is specialized in his particular area and knows it exceptionally well.