All Forum Posts by: Anna Swartz-Lopez

One more point, a HELOC is a home equity line of credit. One of the conditions of getting this is actually living in the property. 

Temporarily renting a less expensive place while you can plan your next move is not a bad idea at all. It makes sense for the long term. If you can refinance or get a HELOC, that may give you the down payment for your next place. One word of warning though, lenders are skittish because of COVID. Many lenders have stopped offering HELOCS at all. I believe US Bank is still actively making HELOCs, but I don't know if they are in your geographic area. Refinancing to capture and pull out some equity may be a simpler move at this point, and it will be easier to do that while you are still living in the property. Once you move out and rent, your options for refinancing get more limited and more expensive.

Hi Morgan, 

Congrats on getting started on this journey as an investor! Kudos to you for making it happen, completely on your own. 

I think you need to ask yourself what your long term strategy will be. If you of the mentality that "cash flow is king," then you want to think about how to build your buy and hold portfolio, so you can have that rental income every month. 

Is the house livable the way it currently is? Perhaps you can rent it out and then take the money you would have spent on the current house, and use that as a down payment for your next property. Just an idea, and it really depends on how nice the property is right now. 

Congratulations on getting started! It's very exciting. First let's clarify a couple terms for you. From a lender's perspective, multifamily is anything 5 units and over. You need one type of loan for 1-4 units, and a completely different type of loan for 5 units and up. Once you make the shift to commercial, ie 5 units and up, the income of the property becomes the main thing the lender looks at, rather than your personal income. 

For now, getting started, if you are going to live in the property and it has 4 units or fewer, then you can use any home mortgage broker. Now be aware that if you are going to live in the property, you need one type of loan, and will be working with a home mortgage broker. If you are going to purchase a property and hold it for investment purposes (ie NOT going to live there), then you need another type of loan. And when you get into the larger properties, 5 units or more, then you will need a different sort of lender entirely. 

Home mortgage brokers (what you need right now) tend to be licensed in only one particular geographic area. I would recommend staying with a local home mortgage person for the property you have described. 

Now, I am a commercial loan broker and I work with investment lenders who can operate in all 50 states, so those lenders do exist as well. Once you are buying property and not living there, you will probably start to work with lenders who have a larger geographic footprint. 

Be VERY careful when you are "shopping". Each lender that you talk to is going to run your credit, and if you "shop" with multiple lenders, you may end up getting worse terms, because you've damaged your credit a bit by the time you get to actually funding a loan. It is better to work with a mortgage broker, because a broker can shop the loan for you, without it damaging your credit. Look for home mortgage brokers in your area that have good reviews, or come highly recommended, and let them do the shopping. 

And for the answer to your third point, the above paragraph applies as well. Let a broker do the shopping for you. It protects your credit, and brokers have relationships with more lenders than you can find on your own. Look for a good broker in your area and go from there. 

You have to put in the time, I'm afraid. There are no shortcuts. Also, it is important to start small and grow over time because you WILL make mistakes, and it is better to learn from mistakes on smaller deals than on larger deals. Just get started and focus on learning your craft, and you can scale later. 

Once you have proven that you know what you are doing, it will be easier to get investors to put their money into your project, rather than always using your own money. 

And she doesn't want to just use a 1031 exchange and buy another property and divert capital gains tax that way? That would be the simplest way for her to avoid capital gains. 

As for owner financing, you might have something there, but I would confer with a good CPA who is used to working with real estate investors. 

Absolutely sign something! Talk to a real estate attorney about the best way to structure your partnership. From a legal standpoint, a partnership joins your finances in the same way that a marriage joins two people's finances. Take the time to get an attorney to help you figure out how to structure your business entity. 

This sounds like a great opportunity for the both of you, and congrats on finding someone to work with like this! Just take the time to structure your partnership in a way that protects both of you. 

Hi Ali, 

Welcome to the real estate game! The important thing to remember is that real estate is a team game. You are going to need a network of professionals to handle the many different aspects of real estate investing. You are on the right track looking for community. Look for real estate meetups, there is a lot of good information available for free out there, and right now all these meetings are virtual. Also, it can be helpful to come alongside an experienced investor and try to work with them in some way.

To figure out your strategy, you need to figure out what you are and are not willing to deal with. Are you going to start as a fix and flipper, and build cash that way? Are you going to invest in buy and hold property and build equity more slowly, but with far less hassle? If you like your current job, and are happy with your living situation, that might be a really easy way to start. 

As for whether to invest in your location, or investing out of state, you do live in a very expensive part of the country. Investing out of state may be an easier entry point for you. If you do that though, it is very important that you get support and invest time in building your network. I recommend continuing looking here at Bigger Pockets. There are a lot of experienced investors here, and the big conference that we just had a month ago was a great way to see what other investors are doing in different parts of the country. 

My recommendation is to keep educating yourself and to try and build your network!

Funding for 100% of the purchase price is very unusual. On their website, do they list recent transactions? Can you talk to anybody who has worked with them before? Try that approach. 

The key here is whether you will be living in the property. Purchasing a property that will be held for investment purposes requires one kind of loan, and purchasing a home that you will live in requires a different kind of loan. If you are buying multiple homes in one transaction, that is an investment transaction and requires and investment loan. 

There are great funding options for investors, just be aware that you will be talking to a different kind of lender.