All Forum Posts by: Scott Shimala

I am reading a book called ‘What Every Real Estate Investor Needs To Know About Cash Flow...And 36 Other Key Financial Measures’ by frank Gallinelli and it’s a great book. Some of it seems more geared towards commercial real estate and very large residential properties but I’m liking what I’m learning.

That being said, I am wanting to buy my first multi family property in 2019. What calculations and formulas do you utilize when you analyze a property? Which are most meaningful to you and why?

@Sasha Mohammed thank you! This is exactly what I was looking for

@Arlan Potter thank you. I think my issue is when I see “exit strategy” I think “how do I get rid of the house and be done with it” but it seems like something like seller financing, lease options, etc. can be considered exit strategies as well

I always see “have a good exit strategy” but the only thing that comes to mind/makes sense to me when “exiting” a property is selling it. What are some other exit strategies out there?

I am thinking about using an FHA loan for my first deal when buying a multi family property and living in one unit. I don’t want to end my REI journey there though. I’m sure banks won’t just give me an infinite amount of money to invest, so how do you find other ways for funding? I’ve read about private lenders, but books and articles just mention them and leave it at that. What are private lenders? Rich people that want to make money off interest? What other ways do you get your funding to make more and more investments?

@Mike Dymski thanks! So theoretically there’s not a limit to how much debt you can carry, as long as you have enough income that the lender is confident in your ability to pay it back?

@Mike Dymski ok I gotcha. Like I said in another reply, how much if any does the pure amount of debt influence if/how much of a loan you can get? And how much does rental income influence that? Thanks!

@Russell Brazil I guess I got rambling a bit while I was typing. If you’re looking to invest in more property, do lenders look at total amount of debt when deciding if/how much to loan? If they do, do they take into account future interest that will have to be paid? Or is it more about purely your ability to pay? And with a good deal/property shouldn’t be a problem with rent coming in.

I’m new to investing and am researching and learning about REI before investing in my first property. I finished my first book on investing in multi family properties and am wondering how you factor in interest when using something like GRM to calculate increase in net worth. The book uses an example like this: Buy $200k quad property with 10 GRM, meaning income from rent per month is $1666.67 or an average of $416.67 per unit per month. After fixing up each unit, you might raise the rent to $500 each, bringing in $2k per month, $24k per year and using the GRM, the property is now worth $240k. So you increased your net worth by 40k. But what about interest paid over a 30 year mortgage? On a 200k loan at 4.5%, that’s an extra $164,813 according to googles mortgage calculator. I get that no matter how much you owe, 40k is always 40k, but where does the extra money owed over the course of a mortgage term come into play when doing things like refinancing, pulling out equity and buying another property? Or a 1031 exchange?

Thanks! I read a bt more of the book and thought about it a little more and was thinking about it the wrong way. I understand it now. Thanks!