New investor financing strategy help.

[Lev D.]

Hi, this topic may have been covered before, but I wanted to get an opinion on this. I'm a brand new investor based out of NYC, looking for advice/opinion.

I'm currently under contract for a single family home in Birmingham, AL. Buying property for $33K, and looking to turn it into a cash-flow section 8 property ($700 monthly rent). House was appraised at $65K in October 2020. Ultimately I'd like to refinance the property, but not sure if I can find a local lender and build a relationship without physically being there.

My back-up plan and what I'm leaning towards is refinancing my NY co-op which I own out right (primary residence) - similar units sold at $195K and I've contacted a local credit union and confirmed that they can refinance 80% of the home value at 3.25%. That will give me a decent amount of cash flow to expand my out-of-state operation.

Should I pursue refinancing the B'Ham house with a local lender? Or simply refinance my current place and have about 150K to play around with?

Thoughts/opinions are welcome.

[James Tebelman]

Hi Lev, I'm looking at investing in Birmingham as well.

I also own my primary residence outright and 've considered the exact strategy that you mentioned.  My problem is that I am self-employed and it's tough for me to get financing right now.  BUT, if I could get a loan on my primary residence, I would definitely do it to free up cash for investing, due to the lower interest rate you can get on the primary residence financing.  But it's really a personal preference thing... some people don't like mixing their primary residence with their investing in any way, and you need to make sure you're OK with the monthly payment on your primary in the event things don't go so well with your investment properties.  I also like to idea of having CASH available to work with to negotiate better deals when purchasing and be able to move quickly.

[Brian Tunnell]

In a situation like that, you may want to talk to Chris Thomas. He's a local mortgage broker and single family investor. If you'd like me to connect you two, just shoot me a private message. :-)

[Dennis Wayne]

Personally I would look for better returns if your going to buy in the rust belt . 700 on 33k wouldn’t get me out of bed but I realize your new and living in New York

[Lev D.]

@Dennis Wayne thanks, my question was more around the financing. Not how good the actual deal is.

[Scott Wolf]

Originally posted by @Lev D.:

@Dennis Wayne thanks, my question was more around the financing. Not how good the actual deal is.

Nice to know Naomi Campbell's spirit lives on! 

Lev, you don't need to have boots on the ground to build connections with local lenders.  I never stepped foot into the bank I got a loan from or met the guy in person, and I was a two hour drive away. Use google, and start calling some banks.  Additionally, I think you can do even better than 3.25% on your primary in NYC.  You should reach out to Michael Kaufman of MortgageDepot. (you can let him know I sent you)  Then you can have a loan on the Alabama property, and more funds to play with.  Good luck!