All Forum Posts by: Tony Castronovo

@Dan Wallace I agree, but perhaps a coincidence that every offer I have that is recourse has no prepayment penalties and the non-recourse does. 

Welcome to BP @George Liu!

Thanks @John Lenhart and @Andrew Fernquist!  I have tried to think through the scenarios and think I am reasonably comfortable that I would not refinance again during the term of the loan.  But selling the property could be more probable and the penalties would definitely need to be factored in to the sales price to avoid eating into our margins.

I guess I am curious if there are MF investors that would opt for a recourse loan to avoid pre-payment penalties.  Or if they just try to negotiate the terms as hard as they can to minimize the impact (but always take the non-recourse financing as a general rule)?

I'm currently in a recourse loan on a MF property and in the middle of refinancing. As I evaluate loan offers I am getting both recourse and non-recourse offers. Of course I understand the desire to have a non-recourse loan.  But seems that these inherently come with pre-payment penalty terms, where the recourse loans have no pre-payment penalties.  Is this just how it works or is it negotiable?

We typically put carpet in the bedrooms and a nice vinyl plank everywhere else.  We try to limit how many different elements we include.  Simple is best.

Welcome to BP @Seun Saka! Good luck on the first rental...that’s exciting!

@Mark Sewell those are areas I used to invest in.  The Bear Creek area (77084, 77449) has some homes in Katy ISD and others in Cy-Fair.  It's the more economical side of Katy some might suggest.  Alot of cash buyers I suspect due to the flooded houses caused by the Addicks reservoir after Harvey.  It's always been a very competitive area for investors.

@Annchen Knodt I drive through Navasota quite often as I have a MF property in Bryan.  I have had tenants who are coming to us because they are relocating from Navasota.  While it's only 20 min away it's still seemingly too far of a commute for those working in B/CS (or students).  I'm not sure there is enough in Navasota to drive the housing demand but would be interested to hear what you learn.

Great that you have a lender offering a competitive interest rate with only 10% down. Please note that I was not suggesting you put more down on the property. It was just a question as I have normally seen higher down payments required by lenders for investment properties. You have to do what makes sense for your situation.

Why only 10% down? As an investment property you should need 20-25% down. It'll lower your COCR but increase the cash flow.

This seems really tight. But you have some equity through forced appreciation. You will also have the tax advantages and principal pay down by your tenant.  It’s important to look at many angles and your ultimate goal.  Your first deal is likely not going to be your best deal. But it will help you build confidence and education. You can spend thousands on training courses. But you’ll learn best by doing.  I’m not advocating this particular deal, but just trying to add some perspective.

Well done @Abraham Anderson! Congratulations!! I'm looking to take a similar path. I have a 20-unit MF and have grown NOI pretty substantially. Not sure if I should sell or leverage/refi. Perhaps you had the same consideration?