All Forum Posts by: Ben Zimmerman

That would be a Texas law. In most states you can get a HELOC on rentals fairly easily. The rates on rentals are usually slightly worse than if you were obtaining a HELOC on a personal residence just like mortgage rates are usually better on a personal residence, and they may not be able to go nearly as high with a LTV ratio on the loan as they could with a personal residence, but my HELOC rental rate was at 4.75% and 80% LTV, which isn't terrible.

A select few brokerages allow you to take loans out against your stock portfolio.  M1 Finance for example allows you to instantly borrow up to 35% of your portfolio balance with no credit check, no application process or anything like that, you simply hit the button and funds are in your account in a matter of minutes.  There is no set repayment period since the monthly payments are interest only, so you could theoretically make interest only payments for decades before finally deciding to start working on repaying the principal balance.  Not only that, but those payments can be made manually, or they can simply deduct the interest payment from your portfolio balance so you never have to worry about missing a payment, (dividend payments from stocks are an easy way to cover the interest charges).  Interest rates fluctuate, but I've been paying 2% on my loans with them.  The biggest risk is if the stock market crashed hard enough, and your portfolio balance dropped below a certain point, they could issue a margin call and require you to deposit additional funds or they would start liquidating your account.

I used Pen Fed for a HELOC on 2 of my rentals. They offer by far and away the best terms since many lenders won't go very high with the total LTV ratios on rental units. Pen Fed offered 80% total LTV, and 4.75% adjustable interest rates and the overall process was super easy and (at least in my case) they didn't require an appraisal even though I opted for the max 80% loan.

https://www.penfed.org/mortgag...

If the original lender is refusing to engage because your cousin is not their client, then how is that not sufficient proof that your cousin was never foreclosed on?  That simple fact alone should be a workable solution.

However, none of this should be your problem in the first place.  The CFPB recently issued a memo reaffirming that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act, and has a long history based on federal court rulings.  The memo further states that these illegal practices adversely impact people of color, because of a general lack of surname diversity.  This notion is further supported by your lender saying they would have accepted a common anglo saxon name like John Smith, but not a common asian name.  This is discrimination based on race, and I would be willing to bet that your lender will suddenly be much more reasonable and more willing to work with you to find a workable solution when they are alerted of these potential legal problems.

https://www.consumerfinance.go...
 

Be honest with yourself for a moment, if you invested the 40k into crypto, what would you do if you woke up the next morning and your 40k had suddenly turned into 25k?  If you're answer is panic, then you shouldn't invest in crypto because I 100% guarantee you that at some point you WILL lose 20-50% or more of your value in a 24 hour period.  While I firmly believe in crypto and how various layer 1 protocols will transform how businesses operate, and that the 1-5 year price outlook is fantastic, that doesn't mean that in the short term its not soul crushing to see your portfolio balance fluctuate by hundreds of thousands of dollars on a near daily basis.  Many people say they would stick it out and not panic sell during a market crash, but trust me when the crash actually happens, you're going to start second guessing your decisions.  

Repaying the MBA loan is pointless.  Even something as simple as lending out crypto stable coins to providers like Nexo, Celcius, Crypto.com,  Anchor protocol, or others, can earn you a pretty risk free 8-20% return on your money.  Why repay a ~5% interest loan when you could safely earn 8-20% instead and profit from the arbitrage?  With the rise of DeFi, banks are obsolete dinosaurs for thinking that people would be content to earn 0.01% interest on their deposits.

Personally I make more money with crypto than I do with real estate, but the only reason I feel confident investing in crypto as heavily as I do is because I have other stable investments like my real estate that allows me to take much riskier bets on volatile assets like crypto.

I completely understand your desire to be independent, but at the same time never discount the power of working as a team.  

In real estate you need a good agent, lender, contractor, PM, etc.  Don't discount family from being part of the team.  If they can easily make life 10x easier, and are willing to do it, then don't try to swim upstream and fight the current just to prove how independent you are.

You may be able to find a local credit union or something that is willing to overlook the 2yr income rule, but honestly if the parents are willing to co-sign, then just do that.

I used Pen Fed for two HELOCs, rates on a rental property was 80% LTV and 4.75% adjustable rate with a 10 year draw and then a 20 year repayment period. It was a super easy process and I highly doubt you will get much better terms than that for a rental property. With most HELOCs on a rental, the lender will offer pretty low LTVs, so this one with 80% is pretty astounding.

 You're spending the money anyway, the difference is I'm getting paid to do it.  On a 250k loan I can knock off about 3 years from a 30yr mortgage and save $14,000 in interest simply by paying my mortgage with my debit card and using the cashback reward as an additional principal payment.  

Is paying a mortgage via debit and saving 14k a groundbreaking technique that will revolutionize my business?  -Nope 

Is a technique that saves 14k per property, and takes no extra effort something for you to laugh at and ridicule?  -Also Nope


@Allan C.  Most companies don't let you pay your mortgage with a credit card, but with third party services like Plastiq you can pay just about any bill including a mortgage for a 2.85% surcharge.  Paying 2.85% to earn 8% is a no-brainer.  On a 1k/month mortgage that nets a profit of about $62/month which can be used as an additional principle payment.  Once you start using your card for all your spending habits, all mortgages, all utilities, all expenses, groceries, travel, paying your taxes via card etc, it can quickly add up to tens of thousands of tax free dollars per year.

8% cashback is pretty insane for high earners. With taxes many people end up paying 30, 40, or 50% of their total income in taxes. So imagine having 8% more total spending power that you never have to pay taxes on since credit card cashback is not taxable per the IRS. While 8% is pretty hard to come by for the average person, there are plenty of other options in the 2-3% cashback range for all purchases. This means that it's no longer worth paying the mortgage in this way because of the 2.85% fee, but it certainly is worth putting any and all expenses you can on the card.

I don't know if I would call it an investment per se, but it is certainly a large stream of income if done correctly.  My Crypto.com debit card offers 8% back on all purchases, which can easily add up to very, very large sums of money.  It's that lightbulb moment where you realize that even after paying the surcharge to pay a mortgage with a card, you still earn positive cashback, making your net interest rate on your mortgage effectively a negative percentage.  

8% cashback - 3.5% pay by card surcharge = 4.5% free money, and considering my mortgage interest rate is 2.75, that effectively means I pay no mortgage interest and still earn 1.75% free cashback.

And the best part is that this passive cashback is generally speaking not treated as taxable income.

Please quote me which insurer that allows for a loan at cheaper interest rates than the guaranteed growth rate from the funds inside the insurance policy.  Any policy I have ever seen that allows the cash value to continue to grow usually charges between 5-10% interest.  The only accounts I've ever seen with loans under 5%, there are very serious side effects of how the cash value in those accounts grows.

At best I've seen companies such as Penn Mutual offer matching loans after a period of 10+ years.  Meaning the loan interest rate would match the guaranteed interest income from the policy effectively making it a free loan.  But then again a free loan to access what otherwise was your money to begin with isn't exactly a groundbreaking ordeal.