All Forum Posts by: Carlos Valencia

Hi Mike, 

This is not a new strategy many investors use this strategies as you can go up to 90% CLTV when applying for a primary Heloc allowing you to tap into more equity if you have it. Helocs are available on investment properties but you can only go up to 70% CLTV. This limits how much money you can tap into if you have very little equity and still owe just below 70% of the value. When applying for new loans at least from my experience its never been an issue with any of our clients getting a Heloc on primary then converting that primary into a rental.

@Albert Bui @Matthew Kwan

Hi Mary, 

It seems its best to cash-out refi on your single family that is being used as an STR. Since its fully paid Cash-out Refi would be the better route to go than a line of credit like a HELOC. You will get a better rate when getting your money via a cash-out than heloc. By the way what market are you in all 3 of your properties seem pretty low in price allowing you to have positive cash flow.

@Albert Bui @Matthew Kwan

Hi Matt, 

Depending how much you still owe it might be better to do a cash-out refi because it will be a little better in pricing in terms of rate as an investment cash out refi. Especially now with rates dropping the pricing will be better. Cash out refi will let yo go up to 75% LTV allowing you to get that extra 5% compared to a Heloc. Helocs on investment properties typically can go up to 70% CLTV. Helocs rates are much higher too like in the 10%-13% rate. While investment cash out is more like in the mid to low 7s. I would look into both options to see which is best for your scenario.

@Albert Bui  @Matthew Kwan

Hi Lisa,

Refinancing out of the hard money is possible. You can do a DSCR refinance. Assuming the value comes in and the rents aren't too low for a decent ratio you maybe able to get enough money to save you. But we would need to look at the total picture to make sure that's even an option. Last resort would be to ask your current hard money lender what it would cost to extend the loan. Sometimes that option is available and it works out.

@Albert Bui @Matthew Kwan

Hello Eric, 

When you say you are interested in multifamily investing are you referring to 5 plus units or just in the 2-4 space? I'm asking because many people easily confuse the two. If you are interested in investing in 2-4 units one strategy many people use is House Hacking where you buy the property as owner occupied with low down payment. Live in one of the units and rent the rest. After 12 months you are eligible to move out and do the same strategy on your next property. Rinse and repeat. But if you are looking into multi units of 5 plus thats out of my wheel house. I have heard many different strategies for those an one common one is going into a syndication with other investors. All that means is everyone puts money into the deal to buy this 5 plus apartment building and split the net profit if any. Many people have also just bought on their own as well. One last thing when looking into 5 plus units you will be in the commercial lending space. 

@Albert Bui @Matthew Kwan

Hello Raphael, 

Its best to use Hard money for fix and flips until you can grow your bank roll. Flipping can look very appealing but in the beginning be ready to make many mistakes unless you are partnering up with an experience flipper. In most cases many beginners do so their risk is low. If you have the 50k you can maybe even use that to partner up with an experienced flipper and put some of that money in the deal as many want you to also have some skin in the game. Once you become an experience flipper you can also get better terms when it comes to hard money especially when you stick to using your regular lender. If you show consistency in bringing good deals and your a good investor they will know your a very low risk so they will cater to you with better terms. In the beginning since they don't know what your capable of it will be costly to use Hard Money. This is why its best to partner up with an experienced flipper as they will already have that track record to get better terms. 

Using others peoples money works too but keep in mind you will have the investors calling you everyday asking about where there is money is at and when do they expect their return. When flipping there's many things that can come up out of your control that can prolong your progress and therefore your investors might begin to get impatient with getting their return. Pick your heat right other peoples money or Hard Money lenders there's pros and cons on using each. Which one do you think is best for you? 

@Albert Bui @Matthew Kwan

Hi Palmer, 

Usually people take out Helocs to have the money readily available for the next deal. Helocs are typically in second position. Its best to do a cash out refi using DSCR. If you think you will need 100k just pull out 100k because like you mentioned you will end up paying more fees to do this 2X. Hopefully you do not have to sit on that money too long. As I'm sure you want your money to continue working for you. A cash out refi is also more cost effective when it comes to rate than a Heloc.

@Albert Bui @Matthew Kwan

Hi Kyle, 

Yeah the only option is to refinance into another DSCR loan. Rates have improved for these loan products as well. Many lenders are at about low to high 7's. You can save a full 1% or more depending on your scenario. If you are self employed you can also look at bank statement loans assuming you have a business with high deposits. These product looks at your deposits from your business and calculates your income that way.

@Albert Bui

Hello Sam, 

Its really going to depend on how much net income you need to live off plus a little extra for emergencies or entertainment. Find that number out first and try to give yourself a buffer since cost of living will still go up but also will your rents and expenses. Once you figure that number out you can determined how much net rental income you will need. Therefore the number of properties will depend on that figure. Focus on the overall cashflow because maybe for you it only takes 10 properties to retire and for others maybe 20 some might need 5 it all depends on how their portfolio is performing. 

@Albert Bui @Matthew Kwan

yes there's many programs you can use DSCR, or conventional. They will just use the market rents form the appraiser and you will need to have reserves 6-12 months. Even if the property is already rented out.