All Forum Posts by: Sam C.

With such a low Cap Rate and low COC, it would need to be a "perfect" property for me.

Perfect: very low maintenance structures. near 100% occupancy, low maintenance tenants, long term stability in the geographic market area, etc, etc.

If you you keep your LTV to 65-70%, loans are fine. If you do the math, a property with a loan can have an equal or better return. I.E.: A free and clear property worth 100K with a cash on cash of 7K a year is a 7% return on the money.

The same property with a 70K mortgage (70K/20Yrs/5%) and a cash on cash of 2K is about 6.7%. That leaves you with 70K for another investment. I personally look to maintain an overall LTV of 55-60%. That's my comfort level. And the lenders love me. I've seen too many investors fall off a cliff with 85-90%+ LTV positions. But free and clear can leave too much money locked in property doing little good.

Simon, I would buy those all day long f I could find them. 

Transferring the deed without the lender's approval is problematic at best. They usually don't care as long a the mortgage gets paid. BUT they do not like it and most likely there would be a due on sale clause in your mortgage. I'm surprised you were ale to sell the property to the LLC without the bank finding out. Did you have to pay the transfer tax? I would find a lender that would be willing to give you a mortgage as an investment property ( if you want to keep it) and see if you can pull out the equity that way. But the transfer to the LLC, in my opinion, complicates the process. Another option is go to your current lender and plead ignorance about selling the property to the LLC and if they have a problem with you moving out and renting it, again plead ignorance and see if they would be willing to restructure the mortgage, Seems to me that your equity (35-40%?) is why they may be willing to do it. But if you keep it as an investment property they will probably want a 30% position to protect them if you default. If you can find a mortgage specialist THAT YOU TRUST they may be able to help you clean this up, get a new mortgage (if you keep it) and pull as much equity out as possible. Or just sell it for as much as you can get, pay off the mortgage ad move on to a new property.

Am I correct to assume that when you say 2-3% you mean rent per 1000? So a 100K property is expected to generate a rent of 2,000-3,000? Where is that happening? Most stuff is reaching retail numbers so good cash on cash or flip opportunities are getting much more difficult to find. And anything that comes on the market in or outside Allentown, Bethlehem and Easton that even remotely smells profitable is bid to high or garbage. That being said, I have been an investor in Allentown ( where I started) since 1987 (and still buying). I'm getting 12-15% COC with a 5%< vacancy rate. Proactive management is a must. But I'm finding that just about everywhere (and at all rent levels) when tenants are involved.