Oregon Approach Strategy

[Bob B.]

Hello all,

I own a SFH here in OR that has seen some good appreciation over the past couple of years. As I move toward finding deal #2 I am trying to set myself up financially to be sure to be able to lock down the deal as soon as I find it. I've decided to do the following to prepare:

1. Get pre-approval for a conventional investment loan (the SFH I already own is an owner occupied federal loan). I don't have a large liquid down payment available so I currently plan on getting pre-approval via a HELOC to serve as the down. Now, I have read some discussion about over-leveraging my property and how it's not the best idea to plan on holding HELOC with a balance for a long period of time so I am more obtaining this approval a) to be able to by conventionally if the right deal shows up and b) to have pre-approval for the refinance exit strategy as well (if needed).

2. I am seeking to get any pre-approval I can with a HML. This way I can pursue distressed properties or properties at auction (with prices the way they are this is likely the route I will end up going). I would then have the ability to buy and rehab and then either resell or refinance and hold, whichever makes more sense for the deal.

3. The 3rd option I have is to sell my first home and 1031 exchange the proceeds into my next deal (or two). The home does not cash flow very well, so the thought of getting the money into a better property or two that would cash flow is appealing. However, it appears that the market pressure may cause the home value to continue to increase quickly over the next year. I would like to sell at the top (like everyone else) if selling is the answer.

This brings me to my current strategy above.

1. Obtain a HELOC simply to get pre-approved for conventional right away. Obtain any kind of pre-qualification I can from a HML and then go find the deal and put the plan together.

2. Find deal, buy and execute.

3. Exit deal or refinance and hold profitably. And plan the next deal.

4. Keep eye on my SFH and find the right time to move the equity into cash flowing properties.

Am I missing anything? Is it a waste of time to get pre-approved for conventional now? Or is that easy to do after finding the deal? In terms of the hard money, do the lenders typically pre-approve? Or do I need to have the deal business plan spelled out already?

Any input is appreciated!