All Forum Posts by: Antony Nguyen

Brian, just saw this now, thanks for the reply!  I will let you know how things turn out.

@Brian G. - thanks for the reply!  I agree that doing two refis close together would cost me money.  I intend to do a couple acquisitions in a short time period and I need a good chunk of my cash from the initial acquisition to go into the second, so to me the fees associated with multiple refis is just a cost of doing business.  I have very good credit and decent W2 income so I am confident I can get loans on 2 properties within 6 months of each other, but if you think or have seen otherwise, let me know!

And as for taxes owed, just to repeat for my own better understanding:  I should not be taxed on the $62.5K cashout from the newer $350K refi loan, and I can write-off interest on the $350K refi loan.

On a sale, I would be taxed on any additional sales profit on top of $350K I get for the sale (or taxes will be deferred with 1031 exchange).  

Is this correct?

Hi Everyone!

This post is 2 questions in one, if it's suggested I post these separately let me know!

First off is my investment strategy. I have some capital to work with and can buy residential properties with cash. My goal is to find good deals, acquire with cash, rehab, rent, refi, and sell. With the refi money I pull out, I would add that to my working capital to do another cash purchase and repeat. I guess you can call this a BRRRSR strategy. The reason I want to buy single properties instead of putting down payments on multiple properties is that I am looking to buy at foreclosure auctions which of course require full cash payments. I can get a good deal, but the number of purchases I can transact is limited by the capital I have.

Here's a scenario that's pretty close to what I'm trying to accomplish:

1) acquire property with an ARV of $350K for $200K cash.

2) rehab, place tenant, season for 6 months

3) after 6 months, do a cashout refi based on ARV $350K, and pull out ~$262.5K. Here's the math, ignoring fees: with a 75% LTV mortage, 75% of $350K is $262.5K. Since I paid cash initially, this cashout is very large compared to partial down-payment investments. My net profit on top of the original $200K investment is $62.5K.

4) wait at least 2 years

5) after 2 years following the cashout refi, sell property at around ARV, $350K

(I am actually skipping/combining a part where I do a Delayed Finance loan to get 75% of my money back asap after the initial acquisition, then do the cashout refi based on ARV after 6 months of seasoning).

My first question is, are the above steps sound, strategically speaking? I am a newbie investor and want to know if the above math sounds right, or if I'm missing something and my numbers are wrong, specifically if the cashout amount is correct, again ignoring fees. For multiple reasons, I do not want to keep the property for more than 2.5 to 3 years, but am willing to keep the property for a couple years, as I've seen comments here on BP that selling quickly after a cashout refi raises eyebrows at the IRS.

Ultimately, I'm trying to buildup a pile of cash within a certain time frame to do larger commercial investments with higher potential gains (this part I'm sure about - don't try to convince me to stay forever in residential haha).

Assuming the fundamentals are correct, the next question is that of taxes. Let's say I sell the property at the ARV that the cashout refi is based-on, and I don't profit from the sale. I did however make $62.5K on the cashout (plus rental cashflow). My question is, is the cashout money ($62.5K) taxable in any way after the sale takes place? Obviously if I were to make a profit on a sale (say $375K sale price, $25K selling profit), I would want to 1031 exchange, but for the purpose of focusing on the cashout, I just want to break even on paying off the mortgage, thus no sale profits.

Any feedback on the above questions would be greatly appreciated! 

Hi Everyone ,

I am wondering what the likelihood of getting a conventional cash-out refinance loan on a mobile home (manufactured home) would be if I purchased it with cash. The sticking point is that the mobile homes I'm looking at all have space rents, ie, I wouldn't own the land and would have to pay a monthly land lease fee (which I can afford fine). The location is the Central Coast of California. What generally is the availability of conventional loans for this type of property? 

My intention is to find a mobile home that I can purchase with cash at around 25% below market-value. An example would be a $100K Zestimate property that I would purchase for $75K cash. My hope would be that I can refinance this and pull out all or most of my $75K - I don't care about extra cash out, though it would be nice of course. I would then use the tenant rental payment to pay the mortgage and land lease, and perhaps get a tiny bit of positive cash flow.

I myself don't own any property yet (I am a newbie interested in commercial properties), but I have some capital and a very good credit score.  I live in Los Angeles, so this would be an in-state investment.

I am in the process of helping my father move into a smaller place. He lives off of fixed Social Security payments and has virtually no equity in a house with a $500K loan balance that he refinanced 10 years ago using an adjustable rate loan. My own mini CMA shows that we would be somewhat fortunate to sell this house for more than the mortgage balance + realtor fees. His SS payments will drop by 20% one year from now as my younger brother will be turning 18, losing the dependent benefit, and he will have a very tough time making ends meet with the current mortgage payment.

I would like to move him into a much smaller home that his SS would cover and still leave him with some living cash, while at the same time providing me with some tax benefit.

If anyone's went through a similar experience in helping their parents, I would love to chat with you!