All Forum Posts by: Rich Bertran

Nathan,

     To your first point, I have two years of rent equivalency saved in reserves for this property; we replaced the roof two years ago, all appliances except the fridge are new or refurbished, the water heater has been replaced and the fence/gates mended from a tornado. To say the least, I am familiar with why reserves are necessary. So for us, this house, if paid off, would cash flow $540 a month. On your second, the total mortgage for both right now is $2,500 a month, and after refi, it will be $1600. To your third & fourth, 80% equity is $180K, and with a 10% SBA loan due to self-storage not being real-estate, I would be able to reach up to $1.8M. As I said from the outset, I am a first-time investor; I have a lot to learn and will continue to learn no matter how much I succeed. And yes, I have a base understanding of how to value self-storage; thank you to BiggerPockets content and networking through others that have been successful in this space in my area.  

      So, I am looking for help to mitigate my wife's worry over risk; it would be much appreciated if anyone has some keen insights here. Or, if my logic is flawed and there is a better way to position my assets to push into the self-storage space, I am all ears.

Thanks,

Rich

FIRST-TIME INVESTOR

REI Pros,

I am looking to refinance my home and pull money out to pay off a property I own in Oklahoma to pull a loan against it and purchase a self-storage complex. Ultimately I want to hold the rental property long-term.

Target Asset Purchase Price: $1.5M-$2M

My Home:

• Loan Ballance _ $208K
• CMA _ $415K-$430K (appraisal due in next week to verify)
• Refi. Rate _ 2.5% (locked in)
• Refi Cost _ $20K
• Equity Pulled _ $124K
• New loan Amount _ $352K

Oklahoma Renal: 

• Loan Ballance _ $124K
• Debt Service _ $840
• Property MNGT _ $125
• Escrow _ $285
• Rent _ $1250
• Cash Flow (after restructure) _ $540, (I am subtracting $300 for the new home loan increase, escrow, & property management fees at 10%) 

If it were all up to me, I would sell both properties and purchase without a second thought. However, my wife is more cautious than me, and I understand her concerns. 

Her Concerns:

• Current home location, cannot re-create for the price point we got into this house, $250K
• Too much debt to get started (target purchase price above), she suggested partners, and I agreed
• Does not want to sell the rental property and put all the money into a new investment

Bottom Line-I needs advice as to the best way to posture our family to move into a multi-unit property that will give better security in our current markets environment. 

Thank you in advance for any and all help/insight.

Respectfully,

Rich