All Forum Posts by: Dale Miller

@Dale Miller

6-10% from what I've seen

@Dale Miller depends on location and rental prices in the area but most common is 10% in lower priced markets plus fees to find a tenant when it goes vacant, some companies have more fees than that.  Yes you sign a property management agreement, usually the term is 1 year and then it transitions to month to month, but if you are a big enough pain in their butt you'll probably get out if you really had to.  They can mail you a check or send you a direct deposit, your call.

@Dale Miller

If you use a RES lender they usually limit the closing costs to 2% of the purchase price. You’re correct that closing costs can add an extra 8-10k. I’m not sure what we are talking about on purchase price but would 2% or less help? It is nice to have that closing credit. Also on rentals I always close at the beginning of the month. You get prorated rents as a credit at close plus deposits.

@Dale Miller you can ask the seller for $5k credit toward closing which will lower the out of pocket amount needed for you to close (ie the seller covers your closing cost). You can have your RE agent include this in your initial offer.

@Dale Miller

Yes. "Up" the purchase price (assuming it'll appraise a little higher). Use the extra cash for closing and down payment.

Unfortunately I don't think so. Usually the mortgage is given based on the appraisal value of the property, and the closing costs are in addition to that. You could probably get a loan to cover the closing costs, but that would be an additional financing. Not sure if anyone has any other ideas?

@Dale Miller

Better option would be cash-out refi when you go into contract. You can write offer as all-cash and 15 day close.

I do this all the time with my clients that have large chunks of equity in other properties. Complete the refi in 15 days, rolling the proceeds over to purchase escrow. Fixed low rate and payment. Alternatively, you can have simultaneous purchase loan and refi, using cash proceeds as large down on purchase loan getting you phenomenal rate and no cash out of your pocket. Again, offering 15 day close with 10 loan contingency is as good as cash to most sellers.

HELOCs serve there purpose though. If having immediate use for the money, then conventional refi is better choice. If just wanting reserve account/line of credit to tap into just in case, then HELOC works. HELOCs right now are probably around 45-60 turn time, though.

Don't make the mistake of getting a HELOC on your property before doing refinance, since you will get higher rate pricing on the conventional refi with subordinate financing in place. Get the refi done, then apply for the HELOC for your safety line.

@Paul Shannon: I think if I could find a 30 yr HELOC I would definitely go for that but only 20 yr ones around here for now. Payments too high for 20 year I would only cash flow a little bit 

@Dale Miller A HELOC is the strategy I used to get started in investing. I will say that line of credit loans are drying up now or the LTV is closer to 80%, when you used to be able to get 90%. Not sure if you can get enough funds to secure the entire deal, but it's a great option to secure your down payment and pay for any renovations. That way you are getting the best of both worlds with the opportunity to do a cash out refinance in 6 months to recover some of the HELOC funds.