All Forum Posts by: Brandon Croucier

Hi Jacob,

Ultimately this is a decision you need to make.

Essentially it comes down to, 

Can you make more money with the equity you pull than what the increased interest will cost you?

It looks like this is a fully amortized 7 year loan meaning, regardless of the interest payments, you are paying the property off at the rate which is similar to an automobile loan. If your goal is building equity, this is great but if its to create cashflow & use the extra income to reinvest this might not be the best loan for you.

Real Estate has appreciated 4-5% per year over the last 30 years, not including cash on cash returns. If you were to use longer term debt, acquire more properties while freeing up cashflow, there is a good probability of increasing returns.

Hi Mitchell,

Given your estimated ARV $250,000 , you will be fine.

You can do a refinance once the property is completed for 75% / $187,500

This will cover the payoff & your closing costs.

Not many people are willing to take that level of risk on leverage, especially in a 2nd position!

You can get up to 80% Cash out on a 1st trust deed, but typically this level of leverage comes with increasing costs & doesn't make much sense to go from 75 to 80 LTV.

Im curious, why would you buy something at an ARV Value prior to it being completed, why not just go find a property on the market where the work is already done?

$7,000 in fees is relatively moderate. 

Most lenders have fixed fees alone of $3,000-$3,500.

Then you have origination fees of 1-3%.

In this case it seems they have fixed fees of about $3,500 with 2% origination.

For a loan of this size this is fair, it takes a lot of work to get a loan funded & you cannot expect someone to work for pennies.

What is the estimated payoff & what will the actual ARV be?
If your credit is solid, the property cashflows you should be able to get up to 80% of the ARV in a rate and term refinance scenario to payoff the debt.

This is a doable deal, just need to work with a broker who knows where to place the loan :)

I may know a guy ;)

 Large banks & lenders typically do not care and have a more streamlined pre approval process involving a credit pull. I recommend working with a broker as they usually have better rates (less overhead cost) & a better overall experience. 

If you have an idea of what your credit score is, a lender should be able to offer you terms based on that info. If agreed upon then you can proceed and have them run your credit.

There are plenty of HML's who lend in Austin.

What kind of deal do you need assistance with?