All Forum Posts by: Andrew Garcia

Hi @Deborah Fung, first and foremost, I am sorry for your loss.

To start, I would look into a simple long-term rental and put 20% down with a conventional loan. That is your safest option in my opinion.

Make sure you work with an investor-friendly realtor and lender to help guide you and analyze the deal for you.

Then, provided that it goes well, you can use the rest of your cash or take out some equity on your current properties to expand your portfolio.

If you were to wait until a recession kicks in, with the idea that prices will drop, there is a major issue. Inflation is already at the highest it has been in over 40 years plus with recessions, rates usually drop, which means that inflation will likely get higher. Higher inflation = higher home prices. Even with a recession, prices may still rise so I would personally advise buying now.

Granted, this is a conservative approach but it is low-risk and lets you see whether investing in real estate is for you.

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

Hi @Soraya Welch, yes pretty much every multifamily lender will require at least 6 months of reserves. If you put down more (30%+), you might be able to get an exception but it depends on the lender.

Hi @Matthew Rubino, the major downside is the rate. It is going to be higher than a conventional loan. The down payment is higher (20%). The process itself is a little clunkier since each loan is manually underwritten but you can still close within 30 days if you are working with the right lender.

Hi @Pruitt Miller, they would not need to use a 1031 exchange because the money that you get from a cash-out refinance is not taxable as it is not considered income.

They could certainly pull out $70-80k to put down on a second home. The main issue that you would run into is the debt-to-income ratio.

However, there are some creative ways of working around it. 

Let me know if I can be of any assistance.

Hi @Mike Lynch, I know a great one! 

You can get HELOCs on investment properties. It might not make sense for your particular scenario but I can discuss the differences, as well as the pros and cons.

Feel free to shoot me a message. I would love to help you!

Hi @Matt M., hello from MD! I do not know any investor-focused realtors in Salisbury but I know a great lender!

I would be happy to help you with the purchase of the property. Shoot me a message so we can discuss your scenario in more detail.

 Hi @Emmanuel Cano, when you speak with them, make sure that you build rapport and approach them with empathy. They are in a tough situation and if you come out like a pitbull, you will likely not get past an initial conversation.

The first step is to find out how to get in contact with them. You can skip trace them or send them a mailer or show up on their doorstep. Usually, you should come into an offer with proof of funds, such as a pre-approval. However, in today's market, it likely won't last long so you need to get in front of them ASAP.

The second step is to get pre-approved to ensure that you can close on the property.

The third step is to determine how much they owe on the property. Offer them speed, convenience, and a way out of their current situation.

The fourth step is to make an offer that covers the amount that they owe plus fees, commissions, and closing costs to ensure that they are at least breaking even.

Once you have it under contract, the lender and real estate agent will help guide you through the process.

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

Hi @Jason G Goepper, I would be happy to answer any questions that you have. 

Off the bat, I see an opportunity for you. You could rent out the other rooms in a single-family rather than buying a multi-family and renting it out by the unit. This usually increases cashflow and might even make you positive. It sounds like the cost of living is fairly high there with the high purchase prices so renting by the room could be a viable option for you.

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

@David Kimball, if you have a high credit score, PMI could be less than $100. I would do a side-by-side comparison between putting 5% down on the new property and putting 20% down.

Obviously, you are looking to invest some cash since you are looking at a cash-out so if you have a better use of the money than putting it as a down payment, you can certainly go that route. 

You could always use a HELOC for your current residence but most HELOCs are ARMs. With the rising rates, if you are not going to pay it off relatively quickly, the lower rate with the ARM will soon become much higher than a fixed rate. You can also look into a fixed-rate HELOC if that is more appealing than a cash-out.

Hopefully, all that makes sense. If you have any questions, please let me know.

Hi @Dylan H., hello from the DMV! There are a ton of options for you. Let me lay some out below (from lowest rate to highest rate):

1. Conventional: Strictest underwriting. Usually, the debt-to-income ratio is what prevents investors from getting this loan.

2. Full-doc: Underwrites similar to conventional, except for income. They use lease agreements instead of tax returns for rental properties and bank statements instead of tax returns for self-employed income.

3. DSCR: Easiest loan to get by far. It qualifies you based on the market rents of the subject property, not the personal income of the borrower.

4. Hard/Private money: typically shorter terms and come from unlicensed individuals or companies funding with their own money or a fund. Each is unique in its underwriting approach.

There are a lot of other niche programs like fix and flips, business purpose, multifamily 5+ units, interest-only, asset depletion, short-term rentals, etc. but those are the major buckets that my clients use for straightforward LTRs.

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