All Forum Posts by: Dorian Weber

@Dorian Weber that sounds great to me to get a higher loan amount on that HELOC. Is this for an investment property or a primary home? Either way, I would certainly expect at least a $95k limit. I would go to another lender ASAP.

Hi Dorian. Unless I missed it you didn't say what you still owe. Or if the house is in your name or an LLC. Let's assume your name and it's your primary. To get 100k you would have to owe 145 or less assuming 70%LTV. As for debt to income it looks like 16% to a normal person. But Freddie and Fannie are anything but normal. But even with all the things they add on your DTI based on 140 looks fine. If all they offered was 33 would seem to be saying you still owe about 212. If you owe 145 or less I'd press them for an explanation. A cash out Refi is definitely another way to go but I doubt the numbers will be much different. Maybe 65. If you are looking for another lender try Mr Cooper or Loan Depot. They do both primary and investment property.

@Carlos H DeOliveira thanks Carlos. I was contemplating the same question. I live in Miami and land is so expensive and for someone with little money this is so discouraging. So, I've decided to take my money and invest in Alabama. This will help me to raise the capital needed to invest in Miami... So thank you for confirming what what I was doubting

Personally, I'm not a fan of selling off a property that pays for itself, especially if you have owner occupy terms. You can always tap the equity and that it is cheapest form of financing you will find anywhere on this planet. 

Why do you feel is necessary to sell your primary in order to access some cash? I'd consider house hacking and leaving a trail of rentals behind you- rather than do a cash out refi, get an aggressive HELOC on each primary before you move out.

I get that you think you need the cash in order to grow your portfolio and get rolling, but honestly, I think you might be missing the forest for the trees. Money is cheap right now and if you can build equity, you'll be much better off in a few years when you have three cash flowing rentals with built in equity that you can leverage that you would be with cash sitting in your bank account. Besides, the time you hold the real estate is where the magic happens- the longer you delay, the further behind you are likely to be. 

Happy investing!

You paid $215k plus $80k in Reno. So you paid $295k. If you sell for $340 and somehow only pay a total of 6% in closing costs (between commissions, inspection repairs, seller concessions, title insurance policies, and transfer taxes, etc.) you’ll net $320k on your $295k investment  (what you owe doesn’t factor in.)

Congrats, you made $25k. Luckily you made $25k on your $120k investment so almost 20%, or 10% percent annually instead of less than 9% (4.25% annually) if you had paid cash, but this is over 2 years. 

And, now you have to hope in this heated market you can find another property that everyone else missed so you can do all this work to try to make $25k. I do appreciate that This puts your firmly in my camp of “no price correction is coming”, because even a small 5-10% correction would cost you all your gains for the last 2 years. 

If it’s worth $340k go ahead and borrow 80% ($272k) which puts $117k in your pocket, especially if it saves you a percent or more. (You should be able to get under 3% as owner occupant.) then you can either use that money as a downpayment for your new primary and you have 2 years to decide if landlording is for you. If not, sell the first primary, no harm bo foul, almost zero extra taxes.  If it turns out you like the extra checks which might make you as much as you made on teh Reno, then win win. 

My first 5 years I bought a new primary every year and turned the old one in to a rental. If you manage to do it every 2 years you’ll still be a lot closer to financial free within 10 years.

But you won’t have any extra cash. If you put down 20k on a 100k property, it appreciates 10k and you sell for $110k minus $10k in closing costs your net sales price of $100k nets you your 20k downpayment back and you are right where you started. In fact you wouldn’t owe taxes anyway as you didn’t make any money. 

Let’s say you got unusual 10% per her (obviously can’t happen more than a few years with house prices doubling every 7 years.). Then you would sell of $120k, pay $12k in costs and and walk with your $20k down plus $8k tax free profit…wow, yeah.  You could just as easily refi at 80% and get $96k loan meaning you got $16k without selling. And you only have to add $4k out of pocket to buy another $100k pocket and you now have the rent from the first property. 

If both go up magic 10% again then you earn $20k, on each of them and now you can do 2 cash out refis and buy #3&4. 

All examples are per $100k cost of property, so yes these numbers look great if you’re talking million dollar properties. But not much different at $200-$300k. 

Ps. The money locked in at 3-4% argument doesn’t make sense as the property you’re going to buy has also gone up so you’ll need a bigger down payment on the new property. 

IF you believe properties are going to keep going up 5-10% you want to own as many as you can, not sell. And it’s all tax free until you sell. Come find me in 10-20 years if we’re both still alive I’ll tell you how you make most of those taxes go away too. :-). 

The only reason to sell the primary and buy a new one is to buy a much more expensive one and repeat. Otherwise you’ve already made the money and as you say, just do the cash out refi and avoid 6-10% in selling costs. Thee are many 2 year periods where a house might only appreciate 6-10%, and then you give all that appreciation to the realtor. 

I suppose another way to do it would be to rent out your current primary after 2 years and but a new primary. Than you still have 3 years to sell your first primary tax free fi the rental pet doesn’t work out. That way you’re earning appreciation on 2 properties tax free at the same time. 

I'm here for the responses.