All Forum Posts by: Dirk Jackson

Like I said Im not trying to get off topic.  But @Thomas Rutkowski what do you mean where I heard what? I am using a Maximum Over-funded policy. I contribute for 11 years up to the MEC limit. I can borrow against the cash value to do whatever I like in this case to purchase more cash flow real estate deals. Since this is a private contract with you and your insurance carrier there is no public record, no DTI, no qualification, no showing up on your credit profile. I can pay the loan back on my schedule I set the terms. This is why I said I like infinite banking a bit more than velocity banking. For anyone that would like to learn more about this here is a link https://www.amazon.com/Becomin...

Sorry what I'm saying is the Heloc is in first position  and there is no other lien.  The properties were free and clear before opening the lines.  The reason I was bringing it up was back in 2008 I was not investing and I heard a lot of stories about line reduction and lines being frozen.  I just wanted to hear from someone that may have had that experience.  Velocity banking is great I use it everyday and have for the last two years. It just makes me question paying off debt with big chunks and not knowing if my cash flow will fluctuate or dry up.  The government has stopped eviction proceedings.  That could cause even the best tenant to second guess paying.  I know Bradon Turner has put out videos about dealing with tenants at this time but every tenant is different just like every unit is different.  I guess it is best to have a uniform policy for this regardless if you have debt on units or not instead of a case by case basis.  Then you hear stories of landlords of the year reducing or foregoing rent.  I really cant agree 100 percent with that.  Show me the money lol.   That is the risk I guess with any loc it can catch you in the middle of velocity banking and catch you off guard.  

 I have recently started to use infinite banking as well.  I like this a little better you build up a big reserve in whole life insurance policy then use that as your loc.  Sorry not to.change the subject but using both those forms of banking together can be very powerful.  

David that is a good point.  I have been using the lines I have for awhile now.  These lines are both in first lien position.   I'm starting to wonder if these lines can be frozen or reduced during these times.  Do you have a. opinion on this?  Thanks.  

https://www.youtube.com/channe...  .  This channel may help you with some examples.  Cashflow is king with this form of banking.  Throw all your income to the Heloc or Loc.  Pay your expenses out of the line.  Leave the cashflow in pay down the line make a big chunk on your debts.  Rinse and repeat.  I paid off 58k student loan in 18 months using this technique and many other debts.  Good luck.

The thing I like about the accelerated loan pay down. Is that you don't have to speculate on a flip or other investment making a return.  You know exactly what your return is by paying down or off the debt.  So that is an investment in it self.  Its probably not as attractive as a new project but it is a way to accelerate what you are trying to do.  

The way I have been using my Helocs is to pay off existing debt and make new acquisitions. People have talked about it here before "velocity banking". Basically take a large chunk of your Heloc to pay down an existing debt and use your existing cashflow to pay back the heloc. Rinse and repeat. I do worry about the freeze on funds, but the helocs are in 1st lien position so not sure if the bank would freeze these or not. You did mention DTI being a concern so by using the helocs to pay down existing debt that would help to get your DTI lower and also build net worth and equity. The acquisition side is just to use for down payments on single families or pay cash. You can then use delayed financing or regular refi to pay heloc down and do it again. Hope that helps.

Good Job! @Gregory Anderson Sr.  I looked at that property too.  Glad to see its working out for you.  Much success to you in the future.

Thanks for the advice.  

Hi,

I have been getting push back about trying to finance new deals before my last loan reports to the credit bureaus. Is this normal should I have to wait to apply for additonal financing until my credit scores update? If so what would you suggest if Im trying to grow and don't wanna wait for lenders to report and update my scores. Thanks a lot.

Ok hi all and thanks to everyone for posting I like reading everyones different perspectives.  So here we go I have my last deal to tell you about.  The property is found here https://www.zillow.com/homes/for_sale/Lima-OH/3313...  .  Here is a link to the auditor's page for the property http://allencountyohpropertytax.com/Property.aspx?...  .

The asking price was $35k we paid $30k using a Heloc @ 6%.  We closed on the property December 2018.  Had a tenant in place Jan 2019 @ $600 month because Im a nice guy lol.  I guess I could have bumped it up to $700 but that sounded like a sweet spot.  So this will be my first property to use Delayed Financing on the guidelines can be found here https://www.fanniemae.com/content/guide/selling/b2...  

I actually have the appraisal scheduled for tomorrow and the closing set for Feb 22.  So the total time from closing to refinance will be about 2 months.  Which actually is about a month too long because Fannie has some reserve requirements you need to adhere to found here https://www.fanniemae.com/content/guide/selling/b3... .  I hear people ask about reserves for Cap Ex, Vacancy, Maintenance, Taxes all the time.  Maybe we should add a category for reserves required for financing crazy fannie lol.  I guess if you are using private financing it may not matter as much.  

I talked to the lender a few weeks before the purchase at a local credit union here. So I started the ball rolling a little early with all my financials. The loan details would be $30k @ 4.625% 30 year term with about $3805 in closing costs which I will try to negotiate. The payment PITI would be $249.24. So I guess that's about $350 in cash flow minus normal expenses.

Before I would have just let the money stay in the property and be making $504.24 in cash flow instead of the $350. Of course I wasn't using a Heloc then I was saving cash. I figure without the refinance it would take me about 12.5 months to payback the Heloc. So now I can repay the Heloc in 2 months and repeat. When I first started my credit wasn't the best so I couldn't have really financed even if I wanted to. So I have been building my credit and learning about the BRRRR strategy. So I decided to give it a shot.

You can tell this adds to the velocity of your investing. Cutting down on seasoning requirements and time it takes to repeat a deal.  I was a bit nervous about getting debt in the beginning but have found that if you are cash flow positive it's not that bad.  Hope this helps and good luck with everyone and their investing!