All Forum Posts by: Becca F.

@Caity B.

Try Figure Lending. It's a hybrid of an equity loan and a HELOC. If you apply for a $200,000 line of credit they will deposit the entire $200,000 into your bank account. Mine is a fixed rate for 30 years but if I draw on it again, I pay the current higher interest rate .Let's say you get the equity line at 7% fixed rate. For example, if you make a $20,000 payment on that $200,000 line, the balance is $180,000. You have room to draw more money. If your want to re-draw $10,000 next week, you pay current rates on that amount, which is over 9% now (not the original 7% rate). The process is all online and you get approved quickly, less than 5 days, depending on if your property has a mortgage and how much. They did a desktop appraisal of my property. I didn't have to submit W-2s, tax returns, etc but your situation might differ.

My lender walked me through the process and you can pay points if you want to buy down the rate - I did zero points. You can do shorter than a 30 year term. My lender recommended getting a little more than I need and that I could always "send the money back" (make a large payment) but if I want to draw on it again, I'm paying higher interest rates. If you pay 10% or more of your principal balance in the future, the equity line re-amortizes and your fixed monthly payment becomes lower. No prepayment penalty also. 

The only thing is that it will show up on your credit report as revolving credit and that you now have $200,000 credit used so your credit utilization percentage goes way, kind of like you maxed out a $20,000 credit card. Interestingly Equifax reports it as a mortgage loan and Experian reports it as revolving credit like credit cards. I have a fixed monthly payment (unlike traditional HELOCs with variable rates ) unless I draw more money in the future, which I don't plan to do, unless interest rates decrease significantly. 

@Warren A.

I'd like to hear more about your turnkey strategy. I found one who has properties in the Midwest (Ohio and Detroit area so far). Their properties are under $150,000. I've been looking at Class A properties in Indiana, Tennessee (Nashville area), Florida Panhandle in $300,000 to $425,000 range but I'm dipping into my reserves to do 20 to 25% down. Not sure if I should look at Class C properties and neighborhoods in California. To me under $150,000 to $200,000 is much better, especially if it's turnkey. 

@Joe Villeneuve

I appreciate the apologies. Thank you. Like the original poster, I became an accidental investor with the Indiana house. It was my primary residence then I decided to rent it out instead of selling it. My other properties fell into my lap so I didn't have to a do a big financial analysis. I'm looking for additional properties but don't want to make a bad purchase, especially at these interest rates. 

@Joe Villeneuve There's no need to be insulting. I passed Algebra and Geometry fine with A and B grades. Many of us were raised to that all debt is bad and to pay off mortgages as soon as possible. Now I know that paying cash for a property isn't a good idea and to leverage debt to acquire more property.

@Jennifer Shen

There's lots of good information on here. I didn't use turnkey companies. I recently did a major renovation on a house that took 5 months - it can be done with a full-time W2 job, lots of running around to order materials for kitchen and bathrooms, buying supplies at Home Depot etc. I had a great contractor who provided the rough materials. It cost me a lot (took out an equity line, a hybrid between a HELOC and equity loan). All new electrical wiring was the largest cost and knocking down a wall. Everything is new in there. I have a tenant in and am getting rent checks now. Good luck!

@Warren A.

I'm in the Bay Area. I'm also wondering about turnkey out-of-state or buying something that needs work. I'd probably use a local realtor and not buy from a turn key company. 

@Mindy Ma

I'm in the Bay Area and finding it very difficult to find anything where my rents would be more than the mortgage payment. I've talked to many investors and everyone has a different opinion. Some people say Nevada (Las Vegas area). Some people say Texas like an hour outside the popular areas (Austin) but property taxes are high. I'm looking in the Midwest (Indiana, Ohio, Missouri) and other states (Tennessee, Kentucky,Florida panhandle area). Other people say no on Florida (definitely no in Miami). Have you considered out-of-state? 

I have a SFH rental in Indianapolis metro area. My property manager quit his full time job recently and has a nice cash flow from his Indiana properties (duplexes and an apartment building). I could connect you to a few realtors and other investors if you might want to investigate Indiana. Good luck!

@Dan H.

The property was a condo with increasing HOA fees so that was mistake #1 and my realtor was not knowledgeable so I overbid on this condo, mistake #2 (vet realtors carefully). For me being -$400 a month was going to affect drain my reserves. Also I talked to several landlords in that area and it's very difficult to evict tenants. In certain cities in the Bay Area, you have to pay a tenant a relocation fee to get them out if you want to sell the property or move back in (it was my primary residence). The location was good for commuters (close to freeway, bus stops), close to shops and restaurants but there was increasing crime. I sold it and I hope the buyer enjoys his new home. If I buy in California again it would a SFH that's further out maybe in the Central Valley as people move further away from San Francisco Bay Area because they can't afford to buy or pay high rent.

I haven't looked into syndication. All of my properties sort of fell into my lap so my weakness is analyzing numbers for future purchases. Thanks for the advice. 

@Mica Moore

Your numbers (property management, taxes, insurance) are similar to mine but I didn't pay cash for my SFH in Indiana. It was my primary residence then I moved and rented the house out. I used much lesser values for cap-ex and vacancy. My rent is more than the 1% rule. Looking strictly at numbers, I should probably sell mine but I bought an upgraded house for such a low price $140,000 with a low interest so I'm keeping it and tenants are paying my mortgage down. Value is around $247,000 to $250,000 and in a nice neighborhood with good schools, primarily homeowners. Midwest historically has slow appreciation but I've had many recommendations by other investors to buy more in the Midwest, much lower prices compared to California which has appreciation but I'm not buying anymore properties on the West Coast. What has been the appreciation in that area? How much could you raise the rent each year? I don't know anything about San Antonio.

@Joe Villeneuve

I agree with not paying cash for property. A lender advised me to take out a HELOC against one of my properties (San Francisco Bay Area) and pay cash for a future rental to avoid the high interest rates now and be favorable with sellers. Her reasoning is also if something went wrong, recession, non-paying tenants, etc, I could just sell it and get all money back. $300,000 to $400,000 is a big outlay of cash (for 1 or 2 properties). Are there ever situations where an investor would be better off paying cash?

Dan, thanks for the feedback. I agree about California appreciation. That's why I didn't sell the SFH in the Bay Area (owned free and clear with low property taxes until I took out the equity line to do the renovations) but buying more properties now, it would be a huge stretch financially for me with high prices, taxes and interest rate.

So you think buying in a CA coastal city and breaking even or even being in a negative cash flow could be a financially smart decision? I'm looking at the Midwest with cash flow of $200 to $300 a month maybe $400 if I'm lucky from what I've heard from other Midwest investors. Midwest appreciation has historically been slow but properties are affordable - I bought a SFH 10 years ago for a low price and and getting decent rental income from great tenants.

@Gulliver R.

Thanks for bringing the topic of LLCs up. I also heard about doing a Wyoming based LLC. None of my investor friends who own 1 to 4 properties in the Bay Area have LLCs, which surprised me. The only person I know with LLCs owns 11 properties in the Midwest. As far as anonymity I looked up one of my friend's properties and it was recorded by the county with his name on it, not the LLC. That doesn't very anonymous to me if his name is linked to the property address. I purchased additional umbrella insurance beyond the rental dwelling insurance. It's fairly inexpensive.

@Jason Marino I'll also look into the Delaware Statutory Trust and consult and real estate attorney.