All Forum Posts by: Yinan Q.

@Michael Molnar, welcome to BP! It's great to see another local investor on the BP community. You've got quite some insightful suggestions. Keep asking questions you will be surprised how quickly you can get them answered here!

Creative! Love it.

@Ana Marie B., I think the difference between HELOC and home equity loan has been explained by others.

With HELOC you have the flexibility to draw from and pay back anytime you need. The interest rate is typically lower but keep in mind the rate will change, most often every quarter. So if you only need the money for a short period of time (such as fix and flip), you will have a good idea how much it cost you.

With home equity loan, the rate will be slightly higher than HELOC but it has a fixed rate. Some lenders allow you to pay back early without early payment penalty but some don't. After you pay it back, you have to talk to the bank again and go through the same process next time you want to borrow.

IMHO, HELOC is good for repeated use for short periods of time, while home equity loan is good for long term use of the borrowed money.

Now, for you case, since you are going to use the money as down payment for your next rental, I assume you probably is not planning to pay it back anytime soon. So home equity loan probably makes more sense. 

@Chester Knapp, you are missing PM and capital improvement costs. The capital could be quite significantly given the age of the house. Of course it depends a lot on what have been done.

I agree with others, this is probably not a good one for buy and hold.

@Caroline Hedin, thanks for sharing your story with us. It's an interesting read. Would you mind sharing your progresses? 

I guess your best bet is to call local REO agents and find out.

I agree with @Vincent Crane

@Allen Clark, I think you are missing a few things in your formula. you need to take into account vacancy, maintenance, and capital reserve. 

The rental market is hot in Seattle so the vacancy rate is low. But this is not going to last forever. Even as hot as it is now, I would consider 4% (2 weeks per year) vacancy in my calculation. You will need sometime to do cleaning and minor repairs between tenants.

The unit is relative new so you don't see much maintenance and R&R (repair and replacement). Regardless the age of the unit, drain will clog, garbage disposal will break, carpet needs to be cleaned/replaced, gutters need to be cleaned. 

It's unlikely you will need a new roof or furnace anytime soon but you should plan for them if you are going to hold the property for a long time.  

If you take into account all these into your calculation, you probably won't see much cash flow. 

I am not saying it's a bad investment. It probably is a good one if appreciation is taken into account. 

It's amazing it only took you less than two months from start to finish. The house looks great! 

Looking forward to your final numbers and thank you for sharing with us.

Darn it! I wish I could go but I will be traveling on that day.

 I love Chase QuickPay. The only thing is that there are limits on how much you can receive over a certain period of time. It's okay if you have only a couple rentals but if you have more you will hit the limit. Here is what Chase says about the limit:

Are there limits to the amount I can send or receive?
Yes. There are different limits depending on the type of account you're using to send and receive money.

Payments from Chase and verified non-Chase accounts

Payments from Private Banking clients

Payments from Chase business accounts

Invoice payments made using Chase QuickPay