All Forum Posts by: Adam Horowitz

@Enrique Rodriguez a 401k loan only allows you 50% of the loan value; look into Rollover for Business Startup (ROBS). You can do this yourself if you are savvy about setting up companies and stock distribution, or have a company set this up for you. ROBS affords you access to all the money in your 401k without the risks of a 401k loan. 

@James Caruso Rental refinance. That assumes you are putting a renter in. If you simply have to hold onto the property due to market forces or what have you, this will not work. 

@Juan Alvarez I second Josh Mitchell; if you can grab an FHA 203k loan, that is a great way to maximize a house hack. You get experience with renters, experience rehabbing. The downside is you are a landlord living among your tenants. This gets old pretty quickly. FHA only requires that you live on the property for 12 months, just enough time to tolerate that situation.

@Christopher Balian pay off your credit card debt. credit card rates are super high interest and will eat into your overall financial picture. By paying off your credit cards, you can then get a high PLOC ($200k+) plus a HELOC. That is a nice start to your REI

Plus, home improvements are rarely positive cash flow. Some of the best home improvements cash flow at 80%; those are the best. Home improvements make sense if your neighbors have significantly higher quality features in their homes. For example, my parents live in Florida and were the last ones to put hurricane proof windows into their house. Down there, making sure the roof is not blown off during a hurricane may decide whether a person will purchase your home or another down the street.

@Aaron Fuhs Wells Fargo does rental HELOCs; last reported at 60% LTV. There are numerous threads on this in BP. Google search "wells fargo heloc rental property".

I have never heard of rolling your current mortgage up into a rental HELOC, though. Keep me posted if this is possible. Rental refinance seems like the obvious choice if you only want to have one payment, but still remove the equity from your rental. Last option is simply to use a PLOC to finance the next purchase; you can get up to $250k if that is enough. Likely, you can use a combination of the HELOC and PLOC to get your next rental financed.

@Collin First position and second position are relevant to what happens if the borrower defaults. First position would get there money back first from the proceeds taken from the loan collateral. If we are talking about first loss position, then the opposite is true....the party in the first loss position will take the financial hit. The point being made is that all parties want to be in the best financial position to recover their money in case something goes wrong; given that you are a newbie, this will be important to lenders. 

As for a solid financing plan, you have a solid plan. A hard money loan with 0% credit cards CAN give you the cash flow to purchase and rehab. If you want to then refinance and rent, you can do this without a down payment. 

I have worked this exact financing model for others before. There are pitfalls, especially if you are low on income and this is your first project. I am available in private PM if needed.

PS. make sure that you negotiate down to 2pts and 12% on the HML. That will get you started in the right direction.

I opened a new LLC in Florida with a nominee manager on the articles of organization. My bank will not do business with me. Does anyone know of a bank that is friendly to owners that want to keep their anonymity from the public? I have no problem disclosing this information to the bank for KYC regulations.

PS. I brought all the proper documentation (power of attorney and LLC resolution), still nothing. I invoked a FL statute forcing the bank to detail why they will not accept my power of attorney; this woke up the regional compliance officer and legal counsel but still they will not work with me.

I don't understand how you're using the BRRRR method.

1. If you Refinance and pay off the HELOC, you won't be able to Repeat and buy another property. The rule on No-Seasoning Cash-Out Refinance forces you to pay all the money from the Refinance back to the HELOC.

2. The only advantage to paying off your HELOC with Cashed-Out Refinance is to secure your property in case of a default on the HELOC.

I have another option for you. Get a Personal LOC instead of a HELOC to fully fund the 2nd property, you can get them at 0% interest for 18 months, no collaterall, no income to verify, just good credit history. This will allow you to Rehab the property, get a renter in, plus, pass the seasoning period. Then, when you Refinance, you can pay back the LOC, you'll have excess cash and equity in your home if needed to buy the next property, plus have access to the LOC. PM me for a Personal LOC up to $250K.

@Mike Taravella Limited banks will offer a HELOC on rentals. Wells Fargo is the biggest name that will offer HELOCs on rentals. Be aware that Wells Fargo offer a lower LTV on HELOCs in comparison to most others.

Have your friend PM me for more info.

I would need more details about how much savings you have, but usually I tell folks to keep their savings... Use someone else's money. They are more than happy to provide it for the right property.