The Rental Market Is BackFlippers Re-thinking Their Strategy October 31, 2006Yes, you heard right. Vacancy rates are decreasing, demand is increasing and I think it's time you became a landlord. Flipping properties is hard. I hear feedback every day from clients who are having a very hard time selling their rehabs. Many of them are slowly losing all of their profit or worse, going broke trying to make the mortgage payments on houses that are sitting vacant and for sale. As many of you know, I invest only in multi-units. I really like 3 and 4 units but also have a couple of duplexes under contract because the deals out there are so great right now. 2-4 unit buildings will qualify for residential financing and you can get 100% financing for these properties. My strategy is to acquire them with 100% conventional financing (with no prepay penalty), fund the repairs out of my own cash reserves and then refinance against the current appraised value. I *do not* take cash out, I just do a rate and term refinance to get the best rates and then usually put a 2nd mortgage against the property at a later date if I want to get that cash back out. This is what works best for me because I am cheap and able to qualify for conventional financing. Your strategy may be different. If you have some cash or equity to put into a deal, I recommend looking at apartment buildings of 5 units and more. There are a ton of properties available right now and with the improved cash flow from increasing rents, many can qualify for my most aggressive commercial apartment loan program - 90% LTV PLUS a 40 year amortization which is unheard of on commercial loans. Here are some recent stats to whet your appetitite: -- Top Rents by Area 1. Boulder County 2. Denver Downtown 3. Douglas County 4. Arapahoe County 5. Broomfield -- Buildings with 2-8 units had the lowest vacancy rate at 5.5% down from 7.6% in the 4th quarter. -- Given the limited number of new additions for the last six quarters, the improvement in the overall Denver metro area economy and the increase in interest rates, we landlords and wanna be landlords have the perfect storm! You cannot go wrong with a buy and hold OR buy fix and hold strategy in real estate. I can help you put together a multi-family investment strategy - just give me a call at 303-534-7078 or shoot me an email to set up a teleconference.
© 2006 Susan Lassiter-Lyons
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