All Forum Posts by: Chris Kendrick

Don't buy a property with a HELOC. You're basically using leverage against leverage. Move more carefully.

Mike,

You have (2) options Heloc or Cash-out refinance but it’s can get tricky if you do not know how banks and underwriting works. Years ago it was smart to pull out a Heloc and use it when- ever you needed to draw from the CL. Fast forward to today now it’s not that great because you can actually take cash out through a refinance at a lower rate than a Heloc. Cash in hand is also an asset and you can purchase the home all cash.

A Heloc is nothing more than a credit card and considered a liability and "Cannot" be used as an asset or PITI/liquid reserves. Knowing this up front can make or break a new purchase during the approval process. The reason why cash out refinance may be the better choice is when you pay "All Cash" you can immediately pull 80% of the cash back out without having to wait (6) months to establish title seasoning.

I understand you may not want to have the mortgage payment but if you buy "all cash" you can put the cash back into the mortgage or into a interest bearing account to counter the rate. The whole point is to keep the cash moving and buying more properties BRRR. The whole time you are doing this you can set aside some of the cash in savings to make the payment until you need to make the next purchase.

You pull out the money, set some aside to pay the mortgage for 6 months and use the remainder to buy the house all cash for best price. Again No 6 month wait to get your cash out you pull out 80% same month and go right into another purchase to build your portfolio.

Biggest thing to remember is as you start to buy more homes the banks/lender require you to show 3-6 Months PITI in cash reserves and a HELOC will not suffice, it will hurt you since it's a DTI burden.

The rate is too low for starters, besides that they gave you a rate without even having a property address, and as my colleague mentioned the website is very new. There are too many red flags and it sounds too good to be true. It's a scam.

The rate is too low for starters, besides that they gave you a rate without even having a property address, and as my colleague mentioned the website is very new. There are too many red flags and it sounds too good to be true. It's a scam.

@Chris Kendrick

I have never worked with this company but you might want to look into a couple of things. Their website is 2 months old, their company is not registered in GA, and they offer a 3% rate for 30 years. Unless the closing costs are crazy high, I don't know why they just wouldn't just purchase a 30-year US Treasury at 3.696% (risk-free). It is a better return, and much safer.

I assume that interest rate is missing a 1 in front of the three? Fannie rates for owner-occupied mortgages are in the low to mid 6%s right now. No way they are charging a 3% rate without a significant, significant buy down...that is...if they will let you buy it down that low in the first place. Rehab loans are 11%-12% with points these days.