One more thought on this: Your IRR and COCR will be higher on an IO mortgage. Your cash flow will be better. IO is a favorite of syndicators and fund managers, who are largely compensated only after they hit an IRR hurdle for their investors. IO helps them hit that hurdle more quickly. From the perspective of a syndicator or fund manager with, say, and 8% hurdle, they're essentially borrowing money from investors at 8% to pay down a mortgage that doesn't contribute to their compensation in the near term. So IO is highly favored in those circumstances and for those borrowers.

The other consideration is that with higher cash flow, you get more operating capital to deal with issues as they arise. This is good. But income is also taxable, and mortgage repayment isn't. Food for thought.

Spex just a shout out. I asked you some fish stuff in 2020 you said don't try and game the market just do what's best for my situation. You made me money with such a simple post. Thanks

hey spex, first off thanks for all your knowledge and posts here. This is all gold.

I don’t even know if this is possible but wanted to see your thoughts on if a refi is possible with the figures below?

Notes: bought the home in April 2021, 5% down on a residential home 400k, this is my primary and only property, still owe 375k, I’ve put a ton of renovations into it and house comps here seem to point around 575-600k at current market

Thx!

I doubt your home went up that much in a year, but contact a Lender and see what your options are.

Definitely with you on the fact that a home doesn't go up that much in value in a short amount of time, I left out some details but I suppose I shoulda rephrased it more in a manner of rule of thumbs for refi and just wanted to hear spex thoughts on this

Why ask Spex - contact a Lender and see what current rates are/fees involved. Interest rates have gone up a lot in the past 6 months so you missed the bottom, but most people gained equity. The other issue with 5% down is you pay PMI - see where all of this factors in by talking with a Lender.

I mean, it's possible, but I don't know whats available right now. Last year I spent $150k on a renovation on my personal house, then refinanced $260k back out (to 80% LTV). Usually to pull cash out on a refi they don't want you to go beyond 80% LTV. But loan programs are always changing so it depends on what is on offer that the moment. It's easy to find out by called a couple local mortgage brokers and asking.

Congrats man, happy to help. Almost all of the time the simple thing that gets you a good result outperforms the complex thing that might get a great result. Usually that's because the complex thing has factors that you didn't think of. True experts in a particular thing makes profiting off complexity more possible, but even for them, the simple good result almost always produces superior returns.

It's one of the things that bothers me about the get rich quick real estate schemers selling no money down "systems". Invariably, the deals are complex to the point of being absurd. But the advice to pay off credit card debt, save money like crazy, and gain lots of expertise by studying and talking to people, well.... it doesn't sell many books.

How do you see the fed rate hikes progressing this/next year and do you think they will come back down anytime soon after topping out?

Any observations or thoughts on the end of the eviction moratoriums in various places? Some of them ended a while ago, but California's only ended at the start of July, and Oregon's ended at the start of August. I assume there are other states whose eviction moratoriums have recently ended or are perhaps still in place. How has this affected the housing market? Is this likely to lead to more inventory as deadbeats are finally made homeless, or are roommates who exploited the moratoriums now flush with cash and looking to buy a home instead of renting?

I'm weighing some homebuilder stocks and assorted REITs, but there are a lot of variables to consider, and I'm having trouble modeling the effect of moratoriums ending. This forum seems to have a lot of people in real estate, so any observations?

I have no opinion on future interest rates. If you want to gamble on interest rates, there are easier ways to do it than buying buildings.

General advice on markets: Avoid any place where renters outnumber owners. Never buy in California, Oregon, NYC or any city that has an established rent control in place. This solves most of your rent moratorium problems.

In terms of builder stocks & REITs, the moratoriums aren't going to have much impact. Interest rates costs are 98% of that market, and wide swings in construction costs are the other 2%. Builders stocks are going to be nasty, REITs generally carry light debt loads so should be ok. But I wouldn't be investing in anything office, storage, or warehouse related right now personally.

I disagree with the rent-control argument.

I've built my entire portfolio in one of the worst rent control places in North America.

There's plenty of money to be made in rent control cities.

thanks so much for this thread spex x!

could you explain what the bolded means? it's probably a fish question but I can't get behind this logic.

don't you want more renters than owners? sort of like more demand than supply? that should bring the price of your product up I'm thinking.

also asking for a friend, should you invest now in a home? if so what state is best in the US? if you don't want to name city, maybe a state?

if you only answer the first question I'm happy too.

so the mogul is busy, does anyone know why he said that??


hit me, please !

Disproportionately high renter to owner ratio implies value in renting vs owning, so why do you want to be buying into that market?

thanks, assuming thats what he meant. it does make sense slightly bc the demand is always a good arguments imo. at least where I am, if there are a lot of renters, that is a huge positve because that means the prices for rents will go up and property prices will also increase. If there is no gov cealing thats about to be installed of course for the rents.

why? because the prices dropped and Im still looking for a good investment, also for a good base. I only wonder if this is a good time now. You can always be renting it out or flip it I am assuming too.

Fair enough. There's many ways to live a meaningful life.

Renters vs owners has nothing to do with supply/demand in a market. Supply/demand is related to housing inventory vs total renters. My comment is really related to the politics of cities with more renters than owners. Political risk is one of the biggest uncontrollable risks in real estate. When renters control the vote, you can almost guarantee that laws will get passed that will have a negative impact on your investment. And remember that leverage works both ways -- it amplifies returns no matter which direction those returns are moving. You can easily have equity across your whole portfolio in a city wiped out at the stroke of a pen held by well meaning politicians. Then Tien will come in a buy your properties in a short sale and get slightly richer while you go broke.

I don't know how to answer this sorry

Real estate values are projected to start going down next year, based on that I would say no if it's a pure investment. If it's a primary residence in a place where you plan to stay for a while, then go for it.

I think the relevant questions are actually where, for how long, and if that even matters for making the investment.

thats an excellent answer, thank you very much. lol about tien.

happy holidays all.

To me, what is more important than rent control is what is the supply and demand.

If there is an enormous amount of demand for rental apartments in my specific area, I will make money long term even in rent controlled city.

If there is an enormous demand to buy apartment buildings in my specific area, the values will push up over time and I will make money.


If there is no demand for either, I won't make significant money even if rent control doesn't exist.

What is principle and interest? I thought just pay your mortgage and property taxes.. Im gussing obviously i have to pay the principle and interest each month as well??


Taken off zillow page of home mobile im looking at.


$67,5002 bd2 ba1,120 sqft
Price cut: $5.4K (10/25)
4470 E Vegas Valley Dr #173, Las Vegas, NV 89121
For saleZestimate®: $64,714
Est. payment: $343/mo
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Overview
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Mobilemanufactured
Built in 2022
Forced air, electric
Central
Carport
$60 price/sqft
Overview
This 1120 square foot mobile / manufactured home has 2 bedrooms and 2.0 bathrooms. This home is located at 4470 E Vegas Valley Dr #173, Las Vegas, NV 89121.
77 days
on Zillow
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views
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Listed by:
Ginny Buzard

Sandhill Valley

Source: My State MLS,
MLS#: 11118493
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Bedrooms and bathrooms
Bedrooms: 2
Bathrooms: 2
Full bathrooms: 2
Flooring
Flooring: Carpet, Linoleum / Vinyl
Heating
Heating features: Forced air, Electric
Cooling
Cooling features: Central
Appliances
Appliances included: Garbage disposal, Microwave, Range / Oven
Other interior features
Total interior livable area: 1,120 sqft
Property details
Parking
Parking features: Carport
Property
Exterior features: Vinyl, Wood
Patio and porch details: Deck, Covered Porch
Other property information
Additional structures included: Carport
Lease amount: $800
Construction details
Type and style
Home type: MobileManufactured
Material information
Roof: Asphalt
Condition
New construction: No
Year built: 2022
Notable dates
Major remodel year: 0
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Utility
Electric information: Amps(0)
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Region: Las Vegas
Other
Other facts
Flooring: Carpet, Vinyl
Heating: Forced Air, Electric
Roof: Asphalt
Appliances: Disposal, Water Heater, Microwave, Oven, Refigerator
CarportYN: true
HeatingYN: true
PatioAndPorchFeatures: Deck, Covered Porch
CoolingYN: true
Furnished: Unfurnished
LandLeaseAmount: 800
ParkingFeatures: Driveway
ConstructionMaterials: HardiPlank Type
YearBuiltEffective: 0
CoveredSpaces: 0
OpenParkingYN: true
LandLeaseYN: true
Cooling: Central
MlsStatus: Active
TaxAnnualAmount: 0
Electric: Amps(0)
OtherStructures: Carport

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Estimated market value
Zestimate®
$64,714
Estimated sales range: $61,000 - $68,000
Zestimate history
Table view
This home
$64.7K
Today
2022
2022
$60K
$65K
$70K
$75K
$80K

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Price and tax history
Price history
Date Event Price
10/25/2022 Price change $67,500 (-7.4%)$60/sqft
Source: My State MLS Reporta problem
10/13/2022 Listed for sale $72,900 (+37.5%)$65/sqft
Source: My State MLS Reporta problem
6/27/2022 Listing removed $52,999$47/sqft
Source: Treehouse Communities Reporta problem
6/2/2022 Price change $52,999 (-30.3%)$47/sqft
Source: Treehouse Communities Reporta problem
5/6/2022 Listed for sale $75,999$68/sqft
Source: Treehouse Communities Reporta problem
Public tax history
Tax history is unavailable.

Monthly cost
Estimated monthly cost
$343

Principal & interest
$262/mo

Mortgage insurance
$0/mo

Property taxes
$57/mo

Home insurance
$24/mo

HOA fees
N/A


Thanks

Is this a trick question? A mortgage is essentially a promise to pay principle and interest on an amount loaned to you by a bank. As back up, the bank is registered on the title in case you do not pay.