I’m getting into my 60’s and own some properties in southern California. Point is in my age, I can’t afford mistakes!!
I’ve been told by several brokers who specialize in home equity investments where they get a re-fi on my existing property and use the available equity to do investments.
For example:
I have a condo in 90046
have about 80k balance on current 30yr fixed mortgage
current value is around 650k
Taxes and insurance and misc fees are about 4k a year
he says
to get a re-fi at ~ 80% LTV on an option ARM mortgage & pay Min. payment (neg. Amort)
so that is $520k loan amount
minus the 80k is 440k to use for RE investing
next he says I can buy three $500k/each 4-plexes totaling 1.5M
by putting down 20% on each or $100K/ea.
and collecting 900/mo from each of the 12 units
and it will cash flow of around $2680/mo
recap:
Number of units purchased 12
Rent per unit 900
Total rent collected $10,800.00 per month
Mortgage payment for source of funds $1,657.09/per month
Mortgage payment for NEW rental units $6,883.88/per month
Property management at 10% $1,080.00/per month
Cash Flow from Real Estate $1,179.03/per month
Depreciation $1,090.91/per month
Interest Income from Savings $412.89 per month (from $ not invested)
Net Cash Flow $2,682.82 per month
Net Cash Flow $32,193.89 per year
Questions:
How can I get the 12 units rent/income flowing w/o a gap in time?
He said that I had to get the Re-fi first and pay off the 80k bal and put the rest in an interest bearing acct. so as to “season” He said that mortgage companies wan to see “seasoned money” I think to react more swiftly when I need to get a 4-plex I like transacted? Is that true?
Can contingency sales be done on 4-plexes(or similar income property) pending the Re-fi? I see this a safer for me.
I have a high FICO, I hear loans can be done in 10-days, the RE market is getting more inventory, mortgage rates are slowing or coming down, property prices are still high, but in my mind must come down to react with the market. This seems like a good time to do this right?
Do I need a Buyers agent for my multi-family purchases? Or is there no such things as a Buyers Agent who will protect my interest.
Are multi-family units easier to handle vs. a strip-center? Which do better in income and appreciation?
The broker says the company he works with Global Equity Lending/Global Realty Marketing is but 3 years old but has attain 4th place in volume of loans in US, in that 3 yr. time. How can I check out this company? He says they do not advertise, word of mouth only.
I did check brokers lic. at the DRE site and he has had RE lic. since 9/01. as broker/officer. When I went to the CA Corp site it said that the (above) companies jurisdiction is in Georgia. Comments?
In Kiplinger there was this article on getting a loan for equity invesing, I’d like to hear comments re. article especially on closing cost.
http://www.kiplinger.com/personalfinance/basics/archives/2003/03/equity1c.html
Do lenders like Ditech really just charge a flat fee of somethig like $400? Or is this just BS and they collect it somewhre else?
I have some experience with real estate as pertaining to my own acquisitions, including raw land, SFR and condo all in So CA and as first owner. My parents have owned apts and comm bldgs. both have had problems, some of which I helped in remedying where property manager did not.
I am all ears on what you have to say. Help me from making mistakes. Or help me by asking questions that I should ask.
Thanks,
ron