All Forum Posts by: Stuart Udis

Some lenders require a "seasoning" period.  Did you merely purchase the home well or did you undertake improvements that led to the $200,000 of equity?  Lenders will generally be more responsive to cash out refinances when you can demonstrate your actions were instrumental in the increased property value. Particularly, when the cash out refinance request comes after a short period of ownership.

Single family homes are going to be far less efficient to operate than multi-family or mix-use assets where you have multiple units under one roof, one sewer lines, lower turn over costs etc.  Within the single family asset class, the lower price point homes tend to perform even worse over time despite the appearance of cash flow in a pro-forma. Those who I've found to be most successful in the single family rental business are investors who acquire homes in markets that experience appreciation and lead to re-sale to an owner occupant. It's not the cash flow that makes the investment successful. 

Based on the figures you shared it seems you have a $92,000 loan on a property valued at $192,000. You can likely refinance this out to 75% meaning a loan of $144,000 less transactional costs (potential pre-payment penalty, title & loan refinance fees). This likely means access to around $45,000 through a refinance subject to the property appraising for $192,000.00. You have to ask yourself if that is going to help advance your real estate business. One thing to be cautious about is using too much leverage, particularly in lower priced assets especially on your initial investments. 

Is this a $200,000 property with $100,000 of equity or a $500,000 property with $100,000 of equity? The point I am getting at is the equity may not be accessible depending on the asset.

Actual performance rarely matched up with pro-formas when it comes to lower class assets, and leveraging these assets at 90% LTV is going to put you in a vulnerable position. The pro-formas and cash flow might appear great but most fail to realize certain capital expenditures are largely fixed whether you are operating a $50,000 SF home or a $500,000 SF home. This is the ultimate downfall for most who buy in these asset classes. I would personally sleep better as the guarantor on an $8,000,000 loan collateralized against an A+ location asset valued at $10,0000,000 than the guarantor on a $65,000-$70,000 loan collateralized against a C or D asset valued at $100,000. Focus on the acquisition, not the lender. Good deals attract favorable financing options.

If the properties are located in suitable locations and the numbers are strong my affiliate construction company will serve as the GC and guarantee the construction loan debt through a JV structure.

Seeking a $250,000 commitment to fully subscribe LP fund focused on Northwest Philadelphia neighborhoods. Over $11,000,000 in debt already originated for various ground up and conversion projects. Please contact me directly for Investment Summary and more details on the investment thesis and already acquired development pipeline. 22% Target IRR

If you are considering properties in Philadelphia be mindful of the tax abatement. While a great tool (especially the prior legislation version), I frequently see properties trade higher than they should because buyers analyze the properties with an extremely narrow lens without appreciating the favorable impact the abatement has on operating expenses. The abatement should have an impact on the valuation, I just find its often over emphasized.

@Sebastian Bennett you are already a few steps ahead of most by merely recognizing the importance of vendor contracts and kudos to your insurance broker for taking the initiative to request the support documents that will attract the most favorably priced insurance quotes. I am hosting a seminar that will be relevant to your questions December 30th from 9 AM to 1 PM EST. Message me directly for more details. 

Join me for a zoom Seminar with Q&A and interactive skill building exercises. Ideal for real estate investors as well as real estate industry service providers. The Seminar will teach the importance of common contract clauses along with contract preparation and review strategies and techniques. Participants will leave with the knowledge and skills to:

• -Efficiently Navigate the Contract Management Process
• -Reduce Insurance Premiums
• -Reduce Legal Fees
• -Reduce Revenue Loss
• -Protect Your Assets

*1 hour recommended to complete pre-seminar assignment 

Date: December 30th, 2023

Time: 9:00 EST- 1PM EST

Admission Fee: $185.00 (promotional pricing available through December 20th, 2023)

Registration Inquiries: [email protected]

Presenter: I am a contract & contract management expert passionate about educating others on contract literacy and contract management techniques. Having previously overseen the contract management of a publicly traded hospitality REIT, I have been immersed in contract management throughout my career. Despite my own recognition of the importance of contracts I struggled to understand why operating businesses placed such little emphasis on contracts. I ultimately concluded contract literacy which I view as the foundation of contract management to be the root issue. Despite the importance contracts play in our businesses, very few understand them. I strive to teach contract literacy and contract management techniques in a simplified manner and in a way that can easily be applied in the day -to- day operation of any small business.