All Forum Posts by: Derek Hookani

Here in Hawai'i a lot of the residents are military and not permanently here so renting is probably the way to go for them even if it is the same or more than a mortgage.

No, it is not as simple as pay your mortgage with a HELOC and you will save money. There is a strategy to make it work. What I talk about below is based on using a HELOC to pay off your mortgage.

The HELOC strategy does work as long as you have positive cash flow each month and you put all that positive cash flow to the HELOC. Instead of keeping your money in a checking/savings account you put that money to work to keep the daily balance of the HELOC as low as you can for as long as you can since interest is calculated on daily balance. All expenses come out of it and ALL income goes into it applying all the positive cash flow to the HELOC balance. Every time you get a pay check, you make a HELOC payment. So if you get paid weekly, you are making a weekly payment to the HELOC dropping that daily balance each time. It will go up and down as you pay expenses and make payments so there is a strategy to timing of those events to maximize the effect.

Yes you can just make those same payments to a regular mortgage but I don't think anyone would be comfortable using all their "savings" each month to make an extra mortgage payment. That's one of the advantages of using a HELOC because if something comes up you still have access to that money. Once you make a mortgage payment say good bye to that money.

For this to work, you absolutely need positive cash flow and keep to your budget to keep that positive cash flow so you can put it to work to pay down the principle of the HELOC lowering the amount of interest you owe. It could be $300 or it could be $3000 in positive cash flow but if you put it all to the HELOC it will work. Of course the bigger your cash flow the faster your pay down gets. The HELOC gives you flexibility a mortgage won't but you have to be disciplined with your budget. This won't work for everyone.

Side note: not evident from above but because you are replacing your mortgage with your HELOC it is assumed that the amount of what your mortgage payment was would be applied to a HELOC payment. Add in the positive cash flow being applied and you are dropping the principle faster.

Wow, that post was a lot longer than I expected. Sorry for the long windedness.

Aloha, Ho'okani

That's awesome Indar. I am also in Hawai'i but just looking to start flipping soon. I know there is still a bunch of opportunity here as I know a few people here killing it but like you said, it's just at a higher price point. Maybe we'll run into each other one day. Aloha.

@Kyle Mitchell Thanks Kyle. One of the things I wondered about was if they went over where u can and can't apply this and where good places are to do it. Pretty much not allowed in Hawaii, at least not in residential areas.

Hi all,

A newbie question here. When a private lender lends out money that comes from their HELOC, they have the cost of interest to lend out that money. Is what they charge normally on top of that cost or inclusive of that cost. Meaning, is it normal for the borrower to pay the amount of monthly interest cost plus whatever rate they ask for or is the rate they ask for normally inclusive of whatever interest they have to pay monthly?

I know with a private lender it's all negotiable but just seeing what is normally done.

Thanks,

Derek

Originally posted by @Eric A.:

@Derek Hookani if you are planning on incorporating a rental arbitrage concept into your business then it’s a decent course. If you are simply setting up Air BnB’s then it’s not the correct course. Check your local ordinances and have at it.

Aloha Eric, yes it would be for leasing out a property and then with the owners permission, doing AirBNB/STR with it.

Anyone here bought this program by Brian Page and find it to be a good course? Seems to be a viable plan but I worry about where you can and can't do STRs and if it's becoming less and less allowed by cities. Can't do it where I am very easily.

Thanks,

Derek

Thought this was interesting. A whole town is for sale in Georgia.

https://www.nbcnewyork.com/news/local/Buy-Entire-T...

Ho'okani

Not so much a discount but maybe a list of vetted lenders both private and hard and not just a clearinghouse list that is currently available on the site. Could be compiled from seasoned investors, pro members, BP users that have actually used said lenders and have a review of them. Would help newbies like me delve into the unknown world of hard money lenders with some level of comfort that these lenders are being used successfully by other BP members.

Mahalo from Hawai'i,

Ho'okani

Hi all,

Just read an article that Zillow will be starting to buy and flip properties themselves and will be testing that model in Phoenix and Vegas. Wonder what sort of effect that will have. They expect to pick up 300 - 1000 homes by the end of the year.

DH