All Forum Posts by: Devin Haertling

Scott Upshaw It would. The last house we bought was a hud foreclosure for 6,000. I used this same loan structure for that loan except obviously it needed some work, well a lot of work. At closing we were able to roll closing costs into the loan for 6k but we were also able to take out an 8 month construction loan for 20k but we only spent 17k. We made interest only payments for 8 months and now we have a note on the property at 23k. We did think about selling the property but we had a current tenant that wanted to a bigger place so we let them move into it. Selling is still an option but for right now renting it is working well especially since I don't have any options for 1031 roll over into another property.

Yes that's what I am doing. Right now I am paying off the notes as quickly as I can. One house I am making double payments on so it will pay off in about 7 years.

Christian Ivanov I will check with my loan officer about the best way to contact him.

Jay Hinrichs It hasn't even crossed my mind that the bank wouldn't renew my loan. I've asked my banker about what happens with the roll over after 5 years and all he said was rates could change. Never even mentioned they could not renew at a new rate. I guess that is a realistic possibility. Something to think about and look into.

Ralph R. Also when my balloon payment comes due in 5 years there is not another loan application process. I just have to pay a recording fee which is about $50 and it rolls into the new 5 year at the banks current terms. Which again has stayed at 4.5% for about 3.5 years now

Ralph R. If the market falls I'm still cash flowing right so even if I'm upside down I'm still making my mortgage payments and putting cash into my pockets. The niche I'm in is a very unique situation. Houses in my small town that are listed at 50k aren't being bought and sit for awhile in some cases. Most people that will rent that house from me can't qualify for a loan and property taxes are a killer on most people. Not sure what your area is like but my 55k house has annual property taxes of 1600. That's killer for people who live paycheck to paycheck and barely qualify for a loan. The people that can qualify for a loan buy the houses listed at 100k plus. This has allowed me to offer low on these houses and every house I have bought has appraised at 2k+ over purchase price. If the market takes a nose dive I won't have the equity to buy more houses but I will still be bringing in rents to cover my payments.

Brandon Hicks My rental rolls are at 3900 per month. I still have to cover costs out of that. After expenses I am clearing about 1000 per month but i self manage and I'm very handy and do all the small repairs myself.

The ways I see myself getting burned on this situation is if for some reason the rental market dried up and I couldn't rent any of my units. But this could also happen with any other financing I could do. The real wild card is the interest rate it renews at after 5 years. So far that number has stayed steady at 4.5% since I started doing this. If my property or rental properties dropped In value I would lose my borrowing ability but my current rentals would still be cash flowing. So a downturn in the market would only affect my ability to buy more properties. I am also paying biweekly on all my properties so they will payoff in 17.6 years approx. I know this hurts my cash flow to a degree but my strategy is to buy and hold for the long term so it makes sense for me. Also the faster I pay down the current loans the faster I can acquire new properties. My goal is to get into multifamily within the next 10 years and hopefully have 20 doors within the next 5-10 years. I'm just taking it slow and steady.

This is the exact email correspondence with my loan officer. Kevin, I have had several people and some other real estate investors ask how I have been able to buy the rentals without any money out of pocket. I tell them I am using the equity in my house but then they have further questions that I cannot answer. I end up telling them I dont know, I have a great banker and he makes things happen!! But really how would I explain to someone what kind of loan I am getting? Its not a HELOC and its not a refi, right? So how would I explain it to another investor? Thanks Devin Good Morning Devin, Thank you for the compliment. You can tell them that we bridge equity from other properties to buy the new ones. Also, you are buying them all on a deal and have some equity to start. If they have further questions I would be happy to discuss it with you or them. Thanks again, Kevin

Elijah Frost There is no increase on the loan that is being used for the equity. With each property there is another lien placed against the property.