All Forum Posts by: Timothy Ryan

I don't know if this info is the least bit helpful or not as I've never used it in an investment property but I have a 50 year old furnace in my house that runs like a champ. But just as a precaution against issues during northeastern winters we use a company called HomeServe that comes in, inspects the system and maintains a service contract good for one year. For us it runs around $350 for the year but it's a piece of mind and if anything should happen, they will come immediately and fix the issue. 

@Christopher Brainard  Thanks for taking the time to expand on your original comments. All of the points you brought up are absolutely the reason why I wanted to bring this idea to the forums, that's exactly the kind of feedback I was looking for. By no means did I post with the motivation of needing someone to tell me all the reasons why this might not be the best idea, but it's always good to hear honest and straightforward opinions. Your comment on financial advisors is spot on and I actually have an appointment to meet with one very soon to get everything on track, I'll even run this plan by them to see what they say. 

@Account Closed Thanks for responding. You're probably right and I know that the terms i'm looking for on the HELOC are a long shot. But since the entire plan really hinges on getting those favorable terms, If I can't get what I need then there is no plan and nothing happens. Nothing lost and nothing gained.

@Nicholas Crum You're absolutely right about the moving money around potentially raising a red flag with a lender and that's something i'm going to have to investigate further.  In my position and with what i'm proposing, i'm going to have to account for a hard money lender looking for a higher rate of return and the deal has to fit accordingly.  Thanks for the advice.

@Christopher Brainard Thanks for your input. I understand the idea of looking to take on additional debt, when my personal finances are not great in great shape, seems like a slippery slope as far as investing goes. You can never 100% plan for everything and there is no such thing as a guarantee especially in the REI world. It's real money and real risk. But if I do my due diligence and the numbers are truly there I have to seize the opportunity.

I own a home valued at 400k with 230k on a 30 year fixed FHA. Our debt to income ratio is too high due to student loans and a few credit cards hence the FHA. Also my credit score is not great right now due to some late payments and the low percentage of available credit versus outstanding credit. Originally I wanted to get a HELOC to fund my first deal but quickly realized that there probably wouldn't be enough money there to purchase outright and rehab. Obviously for the reasons mentioned above we wouldn't qualify for any conventional financing right now. So my new plan is to look for a 90% HELOC at around 5% with a 5-10 year draw period and interest only payments during the draw. Right now we have a monthly debt service on credit cards and student loans of $1,100 which total about $80,000 combined. I want to use the HELOC to pay off the credit cards and student loans essentially consolidating the debt into the HELOC. While this wouldn't necessarily help in lowering the debt to income ratio because i'm just moving the debt from one place to another, it would lower the monthly payments on those items down from $1,100 a month to around $300 a month. The next step would be to use hard money to fund 100% of the purchase price of my deal. I've set a minimum net return on investment of 35% on the deals I've been analyzing (that's after taxes). While that limits the pool, I simply won't accept lower numbers than that before I pull the trigger. I'll use hard money for the purchase, use HELOC to pay hard money points and rehab costs then sell the property. Use the gross to pay back the hard money, pay back the points and rehab costs to the HELOC, pay all closing costs/fees, agent commissions, and set aside money for capital gains tax. The entire net profit would then be applied to the HELOC thereby reducing the outstanding balance and further reducing our monthly payment. Then go and repeat the process until all debts are paid, debt to income ratio is well within guidelines, and then switch to a long term buy and hold strategy. Please let me know your thoughts on this game plan. I want to know if there are holes in the theory and what roadblocks might be expected.

Hi @Latoya Gordon hosts a webinar on various REI topics, there's one tonight on Portfolio Lenders starting at 8pm our time, definitely sign up.

Outside of that, I live out on The Island so it's always great to see more New York faces on BP.  Good luck, feel free to contact me and add me as a colleague.

Hi @Ryan C. Welcome to BP!

**EDIT** To my original post, the BP Podcast I was thinking of was Show 15 with Glenn and Amber Schworm where they started out $80k in credit card debt, maxed them out to fund their first few flips and then used the net to pay off the debts.

Hey @john k welcome to Bigger Pockets. What part of NY are you from?