All Forum Posts by: Chris Mason

 Pretty sure he's not talking about opening a shop in a residential condo. He's talking about "retail on the bottom, residential upstairs."

Random visual:

 Best case scenario for that, assuming an experienced investor with a net worth ballpark proportional to the sales price, rates should be in the 6s. Otherwise, low/mid 7s. Recourse with a PPP, among other assumptions. 

I ran it with an in place 7% cap rate.

Bridge loan. Reach out to a commercial mortgage broker. 

Local insurance broker. 

It's always somewhat the case that lower risk loans = lower rate. But it's vastly more true for HELOCs than 'normal' mortgages. So when you call 10 different places to find the lowest HELOC rate, what you're actually doing is selecting for the least likely positive outcome. The lowest rate of those 10 places you called doesn't want to take 50 applications and fund 50 HELOCs, they want to take 50 apps and 

a) fund 10 of them as-quoted, 

b) re-trade 20 of them (offer a higher rate or lower line amount), and 

c) decline the last 20. 

Looks like they 'got' you and you're in that middle 20 bucket. 

The other extreme of course is the highest rate of those 10 places you called, they want to take 50 apps and fund 45 of them.

Balance in all things. Just like you don't necessarily always want to pick the cheapest general contractor (maybe sometimes you do, but that's a choice you are intentionally making), same thing here. 

Know that, in life, what we think we are doing, and what we are ACTUALLY doing, aren't always the same thing.

Reminder to everyone that just a tad over a year ago, new HELOCs on rental properties basically stopped existing entirely. They are coming back, but this is what that looks like. It's not 2019 any more!

You need to convince the bank that doing that 2nd mortgage for you is likely to be more profitable than buying gov't bonds at 5%+. Having to set aside a non-trivial percentage of that max line amount, in case you ever need it, collecting 0% in the meantime, is not a good way to convince anyone that you're more profitable than a gov't bond at 5%+.

 I guess that's California regulators v Ohio regulators for you.

Another interesting observation, 5 years on. I remember vaguely thinking it was weird that someone would accuse a non-lender of "redlining," since the classic definition is very much a lender-specific thing: drawing lines on maps and not being willing to do mortgages for properties on the "wrong" sides of those lines. However, more recently than this thread, I'd seen "redlining" thrown out, as it was in OP article, more and more commonly, as something 'bad' that's unrelated to mortgage lending. Insurance (property and health) redlining, police redlining, education redlining, etc. I have not seen it in academic contexts yet, but comments, forums, stuff like that. It's certainly a word whose use is trending upwards. 

Kind of like how "violence" used to specifically be a physical thing one person or group would do to another person or group, but now it's metastasized, and mere words can be "literal violence, no cap" too.

Let's see what 2028 will bring! 

You will have to document that your "intention" when you purchased Home A was indeed to live there for at least 12 months. This might involve digging up the guidance from HR to all employees that you could work from home for the foreseeable future (or similar), and then the "whoops" message from HR to you that you were being called back into the office (or similar, such as the email from your manager). They will see that the initial guidance was before you purchased, and the "whoops" message recalling you to the office was less than 12 months from the purchase, ergo nothing calls to question that your intent when you purchased was totally above board, this was unforeseen and unforeseeable by you.

Some of the more conservative lenders I work with likely would not go for this scenario (which usually lines up with the "big bank" answers to such questions), but some certainly would and we do these not infrequently. I'd preflight it with the actual documentation (since it almost certainly isn't as crystal clear as I put it above) just to make sure.

 Currently the only way to avoid paying discount points on an investment property is to put 25% down if it's a single family home. The traditional method of absorbing pricing hits, of increasing the interest rate more, doesn't currently work because no one on Wall Street wants to buy Fannie Mae mortgage backed securities that have any 9%+ paper in it. So the adjustments, in particular the one for doing 20% down instead of 25% down, are applied to discount points instead of a higher rate. 

 I'm reading it as he just went into escrow and just got his initial loan estimate.