All Forum Posts by: Brandon Knight

Thanks for the info, Jason. Is it a useful strategy to use with a HELOC? I have a few cash-flowing rental properties that could be redirected to pay off the borrowed amount from the LOC, including using the cash flow from the newly invested property. It seems like it could be a way to get more properties with less capital on hand.

I've found that the BRRR method is tough right now with appraisals coming in lower than they were a few years ago, maybe leaving you short the cash to pay off the LOC once you cash out refi. Have you heard of anyone using a HELOC with this strategy?

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Hi everyone,

I recently heard of this 80/10/10 financing strategy that can be utilized and wanted to see if anyone has used this before or has any helpful tips on how to take advantage of this. My understanding is that you can get 80% of the property financed, put 10% down, and have the remaining 10% financed on a separate loan or paid for by a HELOC, ect...

Thanks for the Info!

Brandon

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Hello!

I am looking into doing a HELOC on my primary residence to have the cash on standby. Typically people talk about essentially doing the BRRRR method and paying off the HELOC principal after they cash-out refinance. Now that a lot of markets are starting to see lower appraisals, is there another strategy to use a HELOC during this point in the economy?

Thanks for the help!

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Quote from @Andrew Freed:

@Brandon Gale - Great question! If I were you, I would not touch a 2.6% 30 year fixed interest rate on the majority of the loan. I would absolutely recommend utilizing a HELOC. HELOC's are fantastic for buying properties because you can leverage the HELOC for the 20% downpayment with conventional lending so a majority of the loan will be fixed 30 year loan.

What I would recommend is working to pay off the HELOC as fast as possible. In this high inflationary period, it is to your benefit to pay off that balance as quickly as possible rather than have the high interest rates creep up. Some other things I like about HELOCS are below:

1. No closing costs and usually appraisal is covered.

2. You can select interest only first 10 years then P + I. This has huge affects on your DTI since the interest only payment is taken into account and it excludes the principal payment.

3. Open line you can grab from without any questions asked

4. Allows you the opportunity costs of having access to large capital without sitting on a pile of cash and losing it to interest.

Overall, I think HELOCS are one of the best tools in real estate and I plan on opening one on every primary I live in for future use.

Thanks for the information, Andrew. I like the idea of using the HELOC as my "bank" to fund BRRR projects and then pay off the line of credit each time I refinance. Finding one that offers an interest-only payment for a certain period of time seems like an advantage to keep your payments low until you can hopefully refinance and make enough equity to pay it off in full.

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Quote from @Lucas Miles:

@Brandon Knight If you have a interest rate locked in at 2.6%, I would definitely not refinance. A HELOC seems like they way to go in your situation, banks often do HELOCs different. But very common is to open a "line" of credit based on your equity. To determine how much equity you have you might need to have a new appraisal done to confirm this equity (bank specific and situation dependent). Often banks will let you keep this "line" open until you need to use it. After this line established, once you find a property to purchase you can transfer the money over and use it for a down-payment for example.

COC return is highly dependent on your area, type of investing, goals, etc. Many SFR investors with do the BRRRR strategy to pull out their initial investment, at this point your return is effectively infinite.

Thank you Lucas for the information. I agree, I think the HELOC is going to be my best bet. Also love the BRRR idea of paying myself back after refinancing. Seems similar to the "infinite banking" idea.

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Hello! I have a two-part question if anyone has any tips or tricks that would be greatly appreciated!

First question:

I am trying to figure out how to grow my "snowball" as a real estate investor. I currently own two rental properties. I am trying to figure out the best way to get more funds for the next homes. I have approximately $150,000 in equity in one of my homes and do not know if it is more beneficial to cash-out refinance or to get a home equity line of credit on the home to apply to more properties. I am hesitant to refinance because I have a 2.6% interest rate on the home but at the same time the HELOC is a variable rate. Anyone been faced with this same cross road or have any tips on what might be the better option?

Second question:

What is a good cash-on-cash return on a single family rental home that seasoned investors try and aim for? Do you aim slightly higher to give yourself a little extra safety cushion?

Thank you for any responses, it is a ton of help!

Brandon

1 Vote

Hello,

I am a new investor in real estate and am trying to figure out the best route to go in how to scale and own multiple rental properties. I currently own a Single-family home with a ADU that brings in $1,100 a month. I just purchased a property out of state that will be rented in the next few weeks and should cash flow $500 a month after expenses. I had to put more money into the rehab than expected so I am low on cash for the next 20% down. I have about $150,000 in equity in my single-family home with an ADU with an interest rate of 2.6% with no PMI.

My question is, should I refinance my home and pull out the equity to have cash on hand for the next property? Will getting a worse interest rate not be worth the cash equity on hand? I have a full-time job that allows for a flexible schedule and have considered becoming a home inspector to gain more cash faster to invest and scale the snowball faster. Not sure if that is a viable option that is practical and worth the effort?

Thank you for any info or tips! It is greatly appreciated!

Brandon

2 Votes

All Forum Posts by: Brandon Knight

Brandon Knight has started 4 posts and replied 7 times.

Post: 80/10/10 financing strategy

Post: 80/10/10 financing strategy

Post: Best way to utilize a HELOC right now?

Post: Cash out Refi vs HELOC?

Post: Cash out Refi vs HELOC?

Post: Cash out Refi vs HELOC?

Post: Refinance to pull equity out?