All Forum Posts by: Andrew Garcia

Hi @Carlos Morales-Benitez, hello from the DMV! I am not a real estate agent but I would be more than happy to teach you about the lending side of the business if you would like.

Feel free to connect with me. Always happy to help!

Hi @Jeff Slusarz, I see a couple things off the bat.

1. Nicer properties in nicer markets generally appreciate more than slums. I doubt that you would be buying low-cost, low-income properties with the high-income strategy but that is something to be aware of.

2. It takes more time, energy, and effort to find, acquire, execute, manage, and eventually dispose of 5 properties compared to one. You need to factor in your time and labor into the equation. If it cashflows an extra $500 per month but you need to spend 5 extra hours per month on it, is your time worth more or less than $100 an hour?

Those are just my thoughts. Please let me know if I can be of any assistance.

@Emily Wilson, in that case, the HELOC will limit your maximum pre-approval amount but that does mean it will limit it by $100k.

The maximum pre-approval amount is determined by two things.

1. Assets. You need to have enough money for a down payment and closing costs.

2. Debt-to-income (DTI) ratio. This is exactly what it sounds like. It is your monthly debt liabilities + your proposed monthly mortgage payment divided by your gross monthly income.

The HELOC will affect your DTI ratio and thus reduce your maximum approval amount.

You should talk to a lender so that you can get pre-approved. Please let me know if I can be of assistance.

@Thor Fink that is going to be tough. The lender will require title insurance on that property. I am not aware of any lenders that will take that risk.

You can shop around for different title companies to see if there are any that will provide that for the lender. I would recommend getting it for you as well.

That is the only work-around that I can think of.

Hi @Tony C., you have two options here.

1. Cash-out refinance. Fixed-rate, fully amortizing over the life of the loan. Changes the interest rate of the first lien. Similar to a 30-year standard loan.

2. HELOC. Line of credit, usually adjustable rates, can be a fixed-rate. A second standalone lien that does not change the interest rate of the first lien. Similar to a credit card for your house.

There is obviously a lot more to say but that is a very basic overview of the two. They each have their own pros and cons but I cannot advise on which would be better without more information.

Hope this helps! Let me know if you have any questions.

Hi @Abigail Glover, I see a few things here.

1. Since you do not want to do a cash-out, you can look into a HELOC. This would not change your current interest rate, but it would allow you to access your equity. You can use this money to fund the down payment for the flip.

2. The issue with buying at auction is that you typically need a cashier's check or the funds available to purchase the home within 24 hours of the sale. Traditional lenders cannot meet this requirement so you would need to use a hard money lender. The problem you run into there is that they will only lend on experience.

You have two options with that in mind.

1. If you are looking for properties that will cost $200k to buy and rehab, you would have enough funds to buy it cash at auction after closing on your HELOCs. You could then self-fund the rehab and pay off the HELOC in a few months once the property sells.

2. You can get connected with wholesalers or off-market sellers to find people that do not mind a 30-day closing. This will give you time to inspect the property and ensure there are no hidden expenses as well as obtain financing. You can get a fix and flip loan with 6 or 12-month interest-only payments to keep your carrying costs low while covering most of the purchase price and rehab.

Hope this helps! Let me know if I can be of any assistance.

Hi @Eugene DuShawn Smith, I have never heard of such a requirement. It is neither a Fannie or Freddie requirement, nor a non-QM guideline.

If you are closing in an LLC, non-QM is your option. You can qualify based on the current rents of the property.

The rates are not that much worse and it allows you the protection of an LLC.

Please let me know if I can be of any assistance.

Hi @Dave Aheimer, the only way to know is to shop around with some different lenders. That pricing is not out of line with the market from the information you provided.

Hi @Thor Fink, why can't it get title insurance? Are there boundary issues, permit issues, or convoluted ownership? 

Providing the reason will help me understand if there are any solutions.

Hi @Danna Gallow, is there a reason that you need to use hard money? You can find a lender that charges 1.5-2 points or can finance the points into the loan for pretty much any use (fix and flip, long-term, DSCR, STR, etc.)