AZ Networking: CPA & Lenders

[Greg DeFeyter]

Good Afternoon!

I am looking to throw my REI business into the next level. Currently I have one cash flowing property that was my primary residence until last April 2021 when i began renting it out. I am looking to purchase a small multifamily to call my next primary residence in the Phoenix area. Based upon reading several threads and strategies of others it appears that I will be looking for specific individuals in the following fields.

I will need advice and assistance with: Private Capital or Hard Money lenders, HElOC loans, Mortgages, and a REI savvy CPA. Any and all advice is welcomed! If you know someone who fits these expert ices i would love to reach out to them and pick their brain. Below is my current plan. I would love any critiques and tough love advice!

I would like to buy a 4plex in the Western Mesa, Tempe, Phoenix or Scottsdale: eastof I 17 and north of I 10.

Currently I make $67,210 = 48,880 regular wage 18,330 OT
I am a W2 employee as a restaurant assistant manager at the Phoenician Resort, Marriott International

To purchase this property I will use a hard money loan to purchase the asset at 10% down payment.

My down payment will be financed by a HELOC loan taken out of my rental property 3534 Hartford worth conservatively 375000-207000=168000 in equity or 93000 of HELOC.

After acquiring the property I would do necessary renovations on three of the four units. After renovations assign tenants with one-year contracts. Once occupancy is filled refinance the loan with a mortgage either FHA loan or conventional.

Once the mortgage is set up i would pay back the cash lenders and HELOC. Keeping any residual money to remodel of the fourth unit that i would be renovating as i live in the unit. Exit plan 1 to 1.5 years. And keep property as a cash flowing investment. and Repeat.

Currently I make $67,210 = 48,880 regular wage 18,330 OT wage

I am a W2 employee as a restaurant assistant manager at the Phoenician Resort, Marriott International

If each unit rents for 1000 each 1000x3=3000 per month or 3000x0.75=2,250 lendable income.

[Account Closed]

Originally posted by @Ryan Swan:

@Account Closed he wouldn't necessarily have to tell the HML that he plans to occupy any of the units.

@Greg DeFeyter you've laid out a pretty thorough plan and it sounds like you have a good understanding of all the moving pieces. However, your strategy will be tough to execute for a couple of reasons

1) You might not be able to get HML loan at the terms you're expecting, plus interest rates are going up. It could be very expensive to carry that loan for 12-24 months

2) You need to also factor in your costs on the primary residence HELOC, which usually has a variable interest rate. Plan for that rate to go up as interest rates rise over the next 24 months.

3) Not only are the fourplexes expensive in the areas you listed, but also very competitive to purchase. 

4) I'm actually not sure if you can refinance into a primary residence FHA loan for a fourplex that you already own. Plus, FHA has some other rules (self sufficiency calculation being one) that makes it tough to use that financing right now.

Frankly I think there are much better/easier strategies to execute right now rather than going to the MF route. 

Your Comment: "he wouldn't necessarily have to tell the HML that he plans to occupy any of the units."

Seems dishonest and might constitute mortgage faud. A lender has a right to understand the risk he is taking when lending to someone and it is standard practice for HML not to lend to non-owner occupied to stay in compliance with lending laws and with Dodd-Frank.