All Forum Posts by: Joseph Lieberman

well a quick call to Wells Fargo later and they said you could immediately refinance the first house to its full appraised value and use that to potentially make the down payment on the second. You end up paying 1.5% of the cost in title + loan fees twice this way... But that seems so far the best option.

interesting! I am out in oregon if anyone else has any info and that helps.

When a bank does an appraisal I assume thu charge you for it?

-Joe

hey BP,

I've got two properties I'm looking at, both selling below appraised value, and both cash flow positive within my criteria for the local area. However, I don't have the down payment to cover both.

How likely, possible, or willing is a bank going to let me buy one, hand them a recent appraisal, and take out an equity loan to cover the down payment on the second?

Obviously this will decrease the cash flow of one property and I need to find out by how much, but I just want to know if it's possible and maybe what questions I should ask the bank. This assumes of course the seller isn't lying (I haven't had the properties appraised yet, but he said he has and have me the figures)

-Joe

Hey, someone local to me! Amazing :)

Welcome!

I thought I'd come back to this thread with a funny update.

Despite everyone's negativity my grumpy friend made a few calls to a few places he remembered.

Is it an 8%+ property? No. 7.7%... still for my area that's pretty solid and is at least in the running :)

That said I haven't actually looked at

Lesson: Never hurts to ask an agent who's got some time and thinks he may have some unlisted leads.

*shrug*

-Joe

If I wait, then I wait :) it was his idea to look up some properties he recalled matching my needs that were pulled from the market. Doesn't cost me a dime, costs him some time but he didn't seem to mind. Heck if he's a half decent salesman you just have to convince me that I really am unrealistic and find me something better than average :D

Anyway, we shall see how it goes!

I feel like a broken record since my last post said the same thing :) you forgot to account for tax benefits, which will likely add to your bottom line as additional cash flow. You also didn't include annual equity gain, which should be separate, since it isn't liquid, but it's certainly value added.
I don't know the area so I can't tell you if it's a good deal, but you should revise your calculations to include the tax savings and equity gain. I personally avoid trying to guess appreciation value unless I'm certain the market is going up!

K, I had a similar conversation just yesterday night with an agent friend of my property manager. I convinced him to go deal huntin with properties he remembered being pulled off market in the last year and finding out why. From there I figure there may be a deal waiting to happen on one of them. Another win-win scenario is if he finds something, gets his commission, and quite likely as both sides of the agent buyer and seller :) this guy is an old grump too. I basically told him I'm looking for what he considers a home run property and am willing to wait to find one rather than buy something average.

A side note is your spreadsheet doesn't have tax calculations. Between depreciation, income, and mortgage interest you're probably gaining cash on year end taxes, making it more cash positive than you're counting... then again, the best laid plans of mice and men :) It's just a spreadsheet afterall.

In the most broad sense I am with @Joel Owens- Odds are good that if you sell in Aug, move into an apartment while looking for a good 2-4plex, and then finance that 4 plex with another FHA loan you'll likely come out way ahead. Kinda depends on your goals though!

If you "Must move now" I would say the situation is opposite, rent it at the very least till after August (a 6 month lease?). 80k in taxes is not a pretty sight... then figure out what the market looks like some months down the road and if it's time to sell it and move those funds somewhere more profitable.

Steven Hamilton IIJ Scott

I just got my wisdom teeth out on 4/1 in the AM before I wrote that so maybe it wasn't too clear (and apparently came off more rude than I intended!)

I was thinking of an actual partnership, in which two partners are active, you pay yourself some minimal salary as a full time employee and then the rest is paid via quartlery dividends when paying yourself. Lets you save taxes, but then you DO have an hourly wage (it's super tiny and meaningless since the actual wage is a combination of dividend + wages). I'll be honest I forget what the tax implication of it was and why our CPA had us doing that (We since dissolved that company in 2011 via our planned exit strategy. woo woo)

@Steve Hamilton II can probably tell me why :)

As for hourly earnings, I didn't quite mean I had calcualted an exact number in my head, again, that was probably the drugs slurring my clarity :D I know what I make per month, I know roughly what 'potential' contracts are on my table and therefore have a rough idea of the 'value' of my time, which I agree with Terry P. is good to know - if nothing else than as a measuring stick of how things are progressing and if there's need for change in strategy or if I am growing at my expected rate of returns.

So there we have it, a series of slightly different ways to look at things.

I was just saying that the actual value of my time is kept off the books. I know people who literally place a "salary" on themselves (in a non-tax book) and then calculate the profit/loss of the company based on that. For whatever reason I thought that is where we were going :D

-Joe, on Day 2 of recovery and not currently doped.