Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Alan Fong

Alan Fong has started 3 posts and replied 10 times.

Quote from @Glen Wiley:

With each of these you should be asking "How will this improve cash flow?"

- A recessed dryer seems like a waste of money to me.

- A hybrid heat pump is definitely a waste of money.

- Smurf tubing? Why?

- Sound proof between rooms might be an idea worth pursuing.

One problem a lot of landlords run into is that they see the unit as an act of love, not a business. Try to avoid needless improvements.


 Great thanks Glenn.


What do you improvements or modification do you suggest to improve cash flow?

Hello,

I just bought a SFH in Southern California and planning to do a full gut and convert the garage into a unit. I am going to move in the SFH then rent it out both units in the future. This is not my forever home.

Do you have have renovation ideas/items I should I implement to save $ or headaches in the long run with tenants.

For example
- a recessed dryer vent so the dryer can flush to the wall,
- drain pan
- a hybrid heat pump water heater to save $ in the long run.
- smurf tubing
- sound proofing between the rooms

What items do you wish you install that is causing headaches?

Thank you in advance!

Post: Financing next home? HELOC?

Alan FongPosted
  • Posts 10
  • Votes 3
Quote from @Erik Estrada:
Quote from @Alan Fong:

I am currently renting but own 2 properties ~ both have 40-50% LTV. Both properties' rents cover all my expenses. My lease ends next year so I want to buy a small 1bedroom unit instead of renting. I do not plan to "refinance" the properties because I already locked in really low rates.

My DTI% is currently 30% with both properties (rent income + mortgage). However, I was told by a mortgage officer that I can exclude/offset the mortgage payments with the rental incomes from my DTI calculation (forgot what term he used, it has been awhile).

What's the best way to finance/buy my next property to live in?

1- Should I HELOC the down payment, and get a mortgage?
2- Pull HELOC from both homes to buy the unit? 1 HELOC won't be enough.
3- Any other ideas?

Where do you recommend getting a HELOC from? Should I start opening HELOCs with banks so I can pull $ out quickly? I have never used a HELOC before.


If it's an owner occupied residence, you could look into using an FHA downpayment assistance loan. You don't have to be a first time homebuyer to use it.


 TY ERIK!

Post: Financing next home? HELOC?

Alan FongPosted
  • Posts 10
  • Votes 3
Quote from @Rick Albert:

A couple of things:

1) HELOCs on investment properties are tough to find. I called numerous banks/credit unions and they all said only on primary. Now I didn't call every bank out there so you might find someone.

2) How will the HELOC affect your cash flow and your DTI?

You might be able to pull off 3.5% with an FHA loan or 5% down conventional. Depending on where you are looking to buy, it's not that much cash upfront. For example on a $600K purchase that's $30K for a down payment at 5% down.

I bought my first house hack in Los Angeles. It was a fixer condo. I then refinanced and later on got a HELOC to fund the second house hack. A few years later after rehab and some refinances, I just pulled another HELOC and bought out of state.


TY Rick - didn't realize it will be harder for a investment property given that DTI is ~50%. Good to know. I didn;t think about the FHA loan, I always assumed it was for a first time buyer. TY!

Post: Financing next home? HELOC?

Alan FongPosted
  • Posts 10
  • Votes 3
Quote from @John McKee:

Heloc!  I recommend TD bank, but you should always have a Heloc on your primary residence with significant equity.  It doesn't cost you anything and gives you access to cash when you need it.!


 TY John!

Post: Financing next home? HELOC?

Alan FongPosted
  • Posts 10
  • Votes 3
Quote from @Kerry Baird:

@Alan Fong for a HELOC a good strategy is to inquire at the community banks or credit unions local to the property. Perhaps one of these will work for you: CALIFORNIA: Bank of Southern California, Bank of West (BNP Paribas), Cal Coast Credit Union, East West Bank, up to 60% LTV with "no docs" San Fran, First Republic, Fremont Bank, Golden1, HSBC, Quorum FCU, Silvergate Bank, Umpqua, Bank of Marin.


 Thank you Kerry!

Post: Financing next home? HELOC?

Alan FongPosted
  • Posts 10
  • Votes 3

I am currently renting but own 2 properties ~ both have 40-50% LTV. Both properties' rents cover all my expenses. My lease ends next year so I want to buy a small 1bedroom unit instead of renting. I do not plan to "refinance" the properties because I already locked in really low rates.

My DTI% is currently 30% with both properties (rent income + mortgage). However, I was told by a mortgage officer that I can exclude/offset the mortgage payments with the rental incomes from my DTI calculation (forgot what term he used, it has been awhile).

What's the best way to finance/buy my next property to live in?

1- Should I HELOC the down payment, and get a mortgage?
2- Pull HELOC from both homes to buy the unit? 1 HELOC won't be enough.
3- Any other ideas?

Where do you recommend getting a HELOC from? Should I start opening HELOCs with banks so I can pull $ out quickly? I have never used a HELOC before.

Quote from @Bonnie Griffin Kaake:
Quote from @Alan Fong:

I am a newbie investor/landlord and trying to understand the cost segregation aspect of owning. My understanding is this is the last year for 100% bonus depreciation (assume it relates to cost segregation?).

1) Is a cost segregation worth it for a 3BR/3BA townhouse/condo? I spent quite a lot of money on the renovation.

2) Does it make sense since I bought it 2 years ago and am renting it out now? Is it too late?

3) Any other tips/advices?


Thank you in advance


Yes, Alan, it is well worth getting a no-cost pre-analysis/estimate. My guess is that a lot of that renovation, if not all, can be depreciated up front. It does not matter when you do the study but sooner is always better than later for the ability to reinvest the additional cash-flow. 

Was the property occupied when you purchased it? Cost segregation can be done once the property is occupied. The bonus depreciation applies to the year it was occupied as well. Even if the property is a passive investment, if you can't use all the incredible benefits the first year you get the study done, you can roll those benefits forward from year to year until they are gone. You can also group your passive investments and use the losses from one to offset the gains from another. 

 When I purchased it from the previous owner, it was occupied. Then I started to a 6-month renovation and moved in right after. I am just not sure if it worth the effort/$ to perform one since it's a townhouse (not a single family house or apartment building).

Thank you for the helpful tip! I will look into a no-cost pre-analysis/estimate.

Quote from @James Parrish:

@Alan Fong Often cost segregation studies do make sense even if the property was purchased years ago. What you should be thinking about however is if you can use losses created from a cost seg study to offset W2 or other income, referred to as non-passive income. These losses can be locked up if you're not a real estate professional (REPs). If you plan on adding more properties to your portfolio, or plan on spending more time on your real estate in the future it may make more sense to do a cost seg study down the line, so your losses aren't suspended. Remember, bonus depreciation is still 80% next year, which is still significant.

Nevertheless, most cost segregation professionals will provide you with a free analysis that shows you whether or not it's worth it. Hope this helps!


 Thanks James. I wasn't sure if it was worth the time/$ to do one. I didn't realize they do free analysis to show whether or not it's worth it. Thank you so much much!

I am a newbie investor/landlord and trying to understand the cost segregation aspect of owning. My understanding is this is the last year for 100% bonus depreciation (assume it relates to cost segregation?).

1) Is a cost segregation worth it for a 3BR/3BA townhouse/condo? I spent quite a lot of money on the renovation.

2) Does it make sense since I bought it 2 years ago and am renting it out now? Is it too late?

3) Any other tips/advices?


Thank you in advance