All Forum Posts by: Bob Rooks

I've been doing this successfully for the past year as one of the three legs of my RE strategy (flipping, buying income properties, and private lending). With a home equity line around 4% while lending at 12% with points, this generates a nice little return on an asset that's otherwise sitting there earning nothing. Certainly better than using it to buy something that doesn't generate a return at all. The key is that I look at the deal as if it was my own (would I do the deal myself), make sure I have a recorded lien, and stay on top of the project. If I'm in second position, I make sure that I know and trust the first position lender and that they'll allow a recorded second. I'm not lending to random folks, but those in my local REIA only.

I'm curious about the advice to "never pull money out of your personal residence."  Over and over I hear that the return on that equity is ZERO, so I'm inclined to put it to work since that's where most of my net worth is tied up.  For those of us just starting out, cash-out refi of investment properties isn't a reality until a few years down the road.  Curious what others think.

I have just closed on two JAX properties through JWB.  Homes recently renovated and tenants already in place on 2 and 3 year leases. Transactions both very smooth using a lender who is accustomed to working with them.  The thing I liked best was that both properties appraised at or above the sales price...this has not been my experience with other turnkey providers.  Very happy with the demographics of Jacksonville.  i'm investing "out of state" from Hawaii so PM is very important to me and these guys seem to have it wired.  With 20% down and conventional financing, properties in this market are producing cash on cash of about 10 to 12% (before vacancy and maintenance allowances).  

This is consistent with my recent experience. They do offer, however, a "worst case scenario" guarantee when they quote you a price. So there's some protection when the appraisal comes in. But with both my MI properties, I had to bring an extra $7 to $10k to the table due to the low appraisal.  They explained that they price based on the income method rather than the comparable sales method that an appraiser will use. 

This is a key differentiator with JWB, which clearly states that their pricing is based on MARKET value.   I'm looking in Jacksonville for my next properties.  That said, I've had only AWESOME experience with MI.  Their customer service is top notch, closing was easy, they are constantly in touch, and Property Management is first rate.  They had tenants in place before we closed so these have cash-flowed since day 1. Strongly recommend you get your own inspection, though, and insist that the seller address all findings before closing.