All Forum Posts by: Daniel Soovajian

Is it possible to purchase a home outright for cash, get a HELOC on it to get $ for renovations, then get financing on the property after paying off the HELOC?

Not sure if HELOCs are only available on homes that have an existing mortgage.

Hi there,

I've owned a few out of state rentals over the years and am looking to do my first BRRRR. With lots going on with work and my personal life, I'm looking for someone to hold me accountable for making progress towards accomplishing this goal.

I'd like to find someone with a similar goal to do their first or second out of state BRRRR so I can hold you accountable too - and so that we can share learnings along the way.

Send a request + message if interested!

Hello,

I purchased a non-owner occupied duplex rental property last year and have a conventional mortgage on it where I'm paying 6% interest. I'm in the process of researching refinance options with a few lenders - just to move to a lower interest rate, not to cash out any equity - and wanted to get BP's take on what current rates you're seeing.

The loan would be for 75% LTV, I have excellent credit, and cash reserves for that property. Let me know if there's any additional info I should share to get a better idea on reasonable rates to expect.

Thank you! 

Hi there,

I'm curious to hear how out of state investors keep a pulse on the markets you're investing in (e.g. changes to local economy like major employers coming/going, neighborhoods on the rise/decline, etc.).

Here are a few ideas on my radar to stay in touch with the market dynamics:

- Read the annual financial report / CAFR for the city

- Periodically connect with my realtor and property manager for insight

- Set up keyword searches on BP to notify me when the city is mentioned

Anything else the BP community could recommend for this?

Thank you for all the helpful feedback! I really appreciate it

Hello,

About 7 years ago, I purchased a condo from a family member for $50k and after living in it for the first few years, have been renting it out since then. Based on what I see the other units selling for and the condition of that property, my unit should be able to sell for about $125k. I'm trying to figure out the best way to tap into that equity to fund BRRRR investments going forward and one of the options I'm considering is a HELOC.

My question for BP is: what value of the property should I expect a lender to allow me to borrow a % of? I haven't paid for an appraisal on the property since it was purchased years ago so I'm not sure if I should expect to borrow ~75% of the $50k I paid for it years or something closer to its actual market value. From what I understand, HELOCs don't require an appraisal so does the lender just use some other tools to approximate the property's value? 

Wow - thanks for all the responses! Here's my attempt to try and summarize all the awesome information provided here (and make sure I'm not misunderstanding your responses):

After I purchase and rehab a property, I can get my money out immediately if I find a special type of lender (e.g. portfolio lender) that allows this. Or I could get a non owner occupied HELOC to tap into the equity).

If I want a conventional Freddie/Fannie mortgage though, I should wait at least 6 months (or possibly up to 12 months - it depends on the lender) for the seasoning period to be satisfied. Once the seasoning period is satisfied I can get delayed financing based on the new ARV of the property. I can get delayed financing before the seasoning period is satisfied though, but the big downside is that I'll only be able pull out money based on the original purchase price, not the new ARV.

Two important notes to remember with the delayed financing path:

1) To Diana's point - I need to properly document the funds used to initially purchase the property

2) To Jason and Kyle's points, to pull the most equity I can out of the property, it will be based on 100% of HUD or 75% LTV, whichever is lower. 

If I go the LTV path, an appraisal is needed to determine the new value of the property, post renovation. Then I'd get a loan for 75% of that ARV.

If I go the HUD path, before completing the initial cash purchase of the property, I need to provide documentation (e.g. invoice estimates) to the title company on what the projected rehab expenses will be, so they can include it on the HUD. Immediately after completing the cash purchase, the contractors receive their payment in full (for work they haven't performed yet)

Is this an accurate recap?

If I purchase a property and pay for all the rehab with cash, will a bank will require a 6-12 month seasoning period before they will be willing to offer a conventional loan on that property?

Or does the seasoning period only come into play if I initially purchase the property with a conventional loan, make the renovations, and then try to refinance the property once the ARV has increased?

Thank you!

Thanks for the helpful responses everyone! Really appreciate it

Hello,

I'm looking for BP's feedback on what type of tax professional(s) could fit my needs, so that I'm not paying for a professional with all kinds of certifications/education that don't make sense and don't add value for my circumstances.

I have a couple buy and hold rental properties across TN and CT right now and plan to BRRRR my first property in 2019. I'm thinking that I need someone who can help with tax strategy (e.g. 1031s), classifying expenses properly (e.g. improvements vs. repairs/maintenance), can file my taxes, and represent me if I'm audited.

Would a CPA be overkill for my situation? Are there any other tax related services that come to mind that someone in my situation should consider? 

Thank you!