All Forum Posts by: Steven Goldman

For the last several months a classic BRRRR in which you would be able to pull your entire investment out on the refinance has been near impossible. BRRRR has always been about two things, buying right and low refinancing rates. It starts with buying right. You need to find distressed sellers who are motivated to sell under the market price. When the market was super hot this was difficult. Most housing experts believe that as much as a 20 percent reduction in prices is baked into the marketplace over the next couple of years. When prices are more in line with interest rates BRRRRing will be more worthwhile. You can still BRRRR but you need to find a auction property, foreclosure or estate deal and be willing to add enough value to significantly increase the after repair value. Good luck and keep moving forward.

Brandon, in reviewing appraisals as a lender the most common issues impacting appraisals is maintenance of the property. Super important for it to be in good repair. If you know of recent sales near your property that support you value, by all means pull comparables and, give them to the appraiser. How could that hurt? It demonstrates to the appraiser that you have a solid understanding of the value of your property and that you have ammunition to challenge a significantly under value appraisal. (Appraisals are based on opinions)

Also make sure your tenants are not at the property during the inspection. Tenants have a desire to point out to the appraiser all of the maintenance issues with your property. Good luck and keep moving forward. 

Quote from @Alon A.:

Quote from @Steven Goldman:

Hi Alon: You are asking the age old question appreciation or cash flow?  In order to make this decision you need to determine what you are comfortable with and your over all strategy. As to market places. I would stay out of the hottest markets such as Austin and Jacksonville, Tampa and St Pete. Prices have risen so quickly in these areas that they are distorted from their usual rate of appreciation. It is likely they will fall back if the predicted recession materializes. I like Columbus, Akron, Canton and Cleveland. If the anticipated reshoring of industry occurs it will most definitely benefit these areas. Already chip manufacturing and other industry is locating to Ohio. Ohio rents are a little lower than some locations but the housing prices are still a value. Good luck and keep moving forward.

 im not suppose to look for property with high revenue? that when i do the brrrr and do re fi stage it will be alot of value to take and do for another property

Over the past decade, Florida's real estate has risen 282.35 percent, which equates to an annual home appreciation rate of 6.14 percent, according to the data collected by Neighborhood Scout. Jan. 26, 2023.

Are Florida homes overvalued?" Florida metros make up six of the 10 most overvalued housing markets in the nation, according to the latest report from researchers at Florida Atlantic University and Florida International University.  Jan. 26, 2023

 Alon, I was not suggesting you look for low revenue properties. I was pointing out that properties which are overvalued will end up at their historical appreciated values over time. In my opinion, buying in markets like Florida where  prices increased dramatically as a result of Covid is not recommended.(Of course if you can steal something, why not) I remember 2008 when all of the rapid appreciation evaporated and prices returned to their typical appreciation curve value. Value and income are two different propositions. You can find a property that when you add value will produce good revenue without paying a arm and a leg for it. 

Hi Alon: You are asking the age old question appreciation or cash flow?  In order to make this decision you need to determine what you are comfortable with and your over all strategy. As to market places. I would stay out of the hottest markets such as Austin and Jacksonville, Tampa and St Pete. Prices have risen so quickly in these areas that they are distorted from their usual rate of appreciation. It is likely they will fall back if the predicted recession materializes. I like Columbus, Akron, Canton and Cleveland. If the anticipated reshoring of industry occurs it will most definitely benefit these areas. Already chip manufacturing and other industry is locating to Ohio. Ohio rents are a little lower than some locations but the housing prices are still a value. Good luck and keep moving forward.

Hi Nicholas: It is very hard to give you good advice about this property without knowing additional information. For instance where is the property located? What are the taxes and insurance? 

To recap your deal:

Purchase price $100,000.00

Rehab:                $50,000.00 to $150,000.00

ARV: $250,000.00

If the rehab is $50k then it maybe a good deal to take down rehab. flip or hold. If it is 100k or above it is a bad deal to flip but may be a good deal to hold. For instance a 80 percent refinance at $160k will have a current P & I $1,174.00 at 8 percent, plus taxes and insurance. If it can be rented for $3600.00 total depending on the taxes and insurance it doe not look bad. Do all of your homework and the answer will reveal itself. Good luck and keep moving forward.

I agree Jay. When you hit bottom  you can only go up. The damage was in fact done in a shorter period of time, but the last 8 or 9 years of monetary policy was very destructive.(Covid did not help)In many cases money was injected into the commercial market at a zero rate. As PPP loans were forgiven. Not to mention the EIDL loans which were also extremally low interest.

Chris VanAckeren:  Most non-traditional lenders and banks will not lend to a property titled to a trust. I would not use a living trust, revocable or irrevocable, unless you do not intend to refinance in the future. You are seriously limiting your lending options. Finding a home for a property titled to a trust is one of our biggest challenges. Good luck and keep moving forward!

Having lived through several periods were interest rates reached very high levels I can share with you my observations. Low interest rates cause inflation! Inflation causes the Federal Reserve to increase interest rates to slow economic activity. To end a recessions it often requires  the Federal Reserve to lower rates. However, this time things are considerably different than the last three. First, we had economic expansion from June 2009 to present 14 consecutive years of growth. The growth was attributable to low interest rates permitting unfettered access to capital. The long period of expansion prohibits the federal reserve from significantly lowering rates again. Most economist believe such a stimulus would almost certainly cause a rapid return of runaway inflation. This is the new normal.  These rates are closer to historical interest rates. These rates should cause housing prices to moderate and then fall. Of course that depends on the area of the country you live in. Good luck and keep moving forward! Time waits for no man.

Quote from @Gabriel Garcia:

Thanks, Nathan. I am very curious too. I have had several properties where I’ve done a cash out refi on, but had conventional loans on them (vs commercial) for past the season period.

Hi Gabriel: If you wish to refinance inside of 6-12 months most lenders will lend up to 75 percent of the Purchase price and rehab. costs. Most HMLs especially on a 4 plex will want at least 6 months in order to use the appraised value. The refinance can take up to 30 days or more. You can start refinancing with a 6 month seasoning lender at the end of the 5th month from date of purchase. Sorry to be the bearer of bad news. If you find a shorter seasoning lender please share it with the members! Good luck and keep moving forward. 

Hi Mike, I would focus on Ohio which is devalued compared to other places you mentioned. You are going to use your HELOC for the down money and closing costs? Is it a armed interest only loan? I would be careful about using an armed product for your down payment if we hit a rough patch the cost of the money may increase dramatically. How are you going to finance the balance of the purchase? Good luck.