All Forum Posts by: Alex Roter

Hey Ariela,

Since HELOCs come with higher interest rates that are typically variable (not fixed), they are best used in short-term repayment situations. I do not recommend using the HELOC for a downpayment. You would save money by getting a more desirable interest rate with a Cash-Out Refinance--- and spread the repayment over a longer period of time.

Our government encourages shopping around with different lenders, so if the credit report is obtained by multiple mortgage companies within a close time period---let's say a month, the effect on the credit score will be minimal.

Hope this helps,
Alex Roter

Hey Josh, congrats-- sounds like you're making great REI decisions, thus far.

Typically, with HELOCs, the interest rates are higher than what you could expect compared to a Cash-Out Refinance. Also, the interest rates are typically variable. HELOCs may be more beneficial if you plan on repaying the loan within a few years.

On the other hand, if you think it will take longer than a few years to repay, then it may prove more beneficial to do a cash-out refi at a lower interest rate, fixed, and spread out over a longer-term.

Hope this helps,
Alex Roter / Loan Advisor

Hey Morgan,

Congrats on taking action towards your next RE investment! There are some great options out there for you, all asset-based for purchase and cash-out refis. Feel free to message me for details specific to your scenario.

All the best,
Alex Roter

Hey Joseph,

You can obtain a Rehab Purchase Loan with escrow holdbacks (for repairs). You will have to have enough money for the downpayment and to start the renovation process. Feel free to message me for details pertaining to your specific scenario. 

Alex Roter

Hey Troy, 

You can obtain a rehab purchase loan with escrow holdbacks (for repairs). Prepare to bring about 20% of the Purchase Price as a down payment. Also, you need to have the cash to start the rehab work. Once half (or all) of the rehab is completed, you can then "draw" the money out of the escrow account relative to the cost of the work that has been completed. Feel free to message me for more details.

Alex Roter

Hey Tracy, Congrats on the new investment! What are your main concerns right now? Are you in the midst of completing renovations? Are you concerned about filling a vacancy? Is the property Cash-Flowing?

Hi Kimberly,

Congrats on taking the steps to become a RE Investor! You can either purchase using all cash, or you can obtain a loan with a down payment; Lenders will typically ask for 15% down. A great place to start would be to connect with a local mortgage broker to see where you fit best.

Hope this helps,
Alex Roter

Hey Nathan,

If there is no track record of previous income, then the Lender will typically use market rents from comparables to determine the Net Operating Income. They will see what use select properties in close vicinity that have similar building characteristics and see what those landlords are charging for rent, as well as their expense and vacancy factors. Luckily, Fayetteville is non-rural, so there's a good chance the Lender will find sufficient comparables to warrant a strong value.

Regarding the seasoning period to show NOI for a cash-out refinance, the Lenders I've encountered typically compare what the rents collected are vs market rents, and usually go off of the lesser of the two. So seasoning did not really play a factor.

I've seen seasoning become a factor when wanting to do a Cash-Out Refinance based on an After Repair Value (after renovations are completed) to use the newly appraised value. The Lender ruled that if the property was purchased less than a year ago, then the value will be based on the Purchase Price + any renovation costs added as a dollar-for-dollar figure. However, after one year of seasoning, this Lender would allow for the value to be based on the newly appraised value, which can be significantly more due to renovations providing more value than the dollars invested (ideally $2 in value for every $1 spent on repairs).

There are many types of Lenders with varying, ever-changing guidelines. Working with a mortgage advisor is a great way to find a product suited for you. Feel free to message me for more details.

Hope this helps,
Alex Roter

Hi Pooja, 

Interest rates are still low, this may be the ideal time to refinance before rates start going up again. You have a few options to utilize your properties' equity to finance the cost of rehab, you can do one of the following:

1. Take out a HELOC on your primary residence, although this is only ideal if you plan on paying the money back within a few years (due to the higher interest rates compared to option 2 and 3)

2. Perform a Cash-Out Refinance on your primary residence.

If you don't have enough equity in your primary residence, then you can do either of the following:

3. Perform a  Cash-out Refinance on your Rental Property

4. Obtain a Rehab loan on the Investment Property, based on the After Repair Value (ARV).

Hope this helps,

Alex Roter

Hi Haeden,

You can do a cashout refinance of your current residence and use that as a downpayment on a new primary residence. On rental properties, you can get about 75% loan-to-value. Just let the new lender know that you'll be using the proceeds from the refinance as a down payment for the new home.