All Forum Posts by: Tyrek Brown

Hey Pamela!

My personal opinion on this one would most likely be no, it doesn't make sense to refinance. 

There are a few factors that ultimately have to be considered.

First, when you refinance the property your lender will need to base the new loan on the current value of the property with LTV guidelines. That means that you will need to bring between 16.5%-21.5% of the down payment you didn't bring using FHA plus closing costs.

Second, since you will still be occupying the property FHA will require you to have a specific circumstance for purchasing the other property. These include: relocation for work, divorce, growing family, moving out of state, etc. 

Lastly, mortgage rates are much higher now than before, around 7% for residential. Will your property still cashflow with a rate that is twice as high? This is a huge increase in the mortgage payment and may make a cash flowing property quite in the negative. 

House hacking is actually known to be one of the best ways to utilize a variety of tax breaks in real estate. Some of the basic tax breaks are depreciation, two-out-of-five tax gains break, and tax-deductible expenses related to operating your rental. 

Hi Ivan,

If you plan on operating in and out of state, it makes sense to open an LLC in the state you reside.

Otherwise, it will be cheaper to make the LLC in the state you are operating in since you won't need to file for a Certificate of Foreign Registration. That certificate is essentially like filing your LLC in another state, and costs around the same. 

You should never be more than 70-75% of the ARV into the property. For example:

Property has an ARV of $200,000 and needs $30,000 in rehab.

The max amount of money you can be into that project is $150,000 so you shouldn't be offering more than $120,000 for the purchase. 

You can determine any additional costs (fees, points, etc) from your lender. 

We will definitely be seeing some BRRRR investors pivot to DSCR lenders from bank institutions.

However, private money and cash can still be used to purchase properties and be eligible for 6-month seasoning.

I'm sure the savvy investors will find there are still plenty credit unions and local banks out there that service their own loans and won't need to worry about the requirement. 

If you plan on holding this property for longer than 7 years then 100% you should have the seller pay for the discount fee. You'll earn more than $2,180 after that point just from the seller buying down the rate. 

I wouldn't base my calculations today on a hypothetical monthly income unless the property is vacant or those specific units will be vacant at closing.

With that said, at $700,000 the deal looks more promising. Cashflow is still quite a bit low on this one since all the rents aren't at market, but if you can get the rents up then this is a good deal. 

Many policies start at $100,000. But it only really needs to cover the amount of assets they own so you could write $100,000 or an amount equal to at least the total value of your assets. 

Welcome to the community Eric!

How long have you been investing and what made you pick Philly?

Hey Jason!

To add on to Jaron's post-

I think the main questions you just need to ask yourself here are:

Will you recoup the losses for the repair faster with the current property or with other properties?

If you do decide to move into the Atlanta market, are the neighborhoods/appreciation equal or better than the current?

If those two are true, I would say that it's fair to consider moving on. Especially because something like this will most likely be a recurring issue considering the property is near water and you can find a property that's closer to you in Atlanta.