All Forum Posts by: Edward B.

@Jordan Stallard, a HELOC is revolving credit and I believe in revolving it. The power is being able to use it over and over again without having to go "mother may I" to the bank each time. Too bad you aren't on board with BRRRR because the HELOC is ideally suited to it.

Regardless, I would point this out. The only difference between paying the HELOC down and saving the money for another down payment is the interest you pay on the HELOC and the interest you earn on your savings because either source can be used for another down payment. So if your savings are earning .85% and your HELOC is costing you 3.25% then pay down the HELOC. If the numbers are reversed, well you are probably investing your savings too aggressively, but then save the money.

@Brandon Fuhrman, Cash is King. Most people who go bankrupt do not do so because they owe more than they are worth. It is because they owe more than they can pay. They can't make their monthly nut. Unless you have a job that allows you to afford being cash flow negative, in the beginning I would focus on cash flow until you build up enough that you can make more speculative bets. Because appreciation plays are all speculative and should be left to experienced players who can afford to be wrong.

Yes, you will make way more money on appreciation in the long run, but it works both ways. It will wipe you out way faster and before you even get started if you bet wrong. 

@Bill Jackson, no one can honestly answer your question about what is best without knowing your financial circumstances and goals better. I can tell you this

1. you will pay tax as if you had earned that $200k from your job unless it is a Roth. Add to that any other earned income for the year. So if you made $50k that year you would be taxed as if you had earned $250k. 

2. Highly highly dependent. 

Your last statement is true if you are a Dave Ramsey fan. The vast majority of real estate investors would disagree with you. Also, on the social security front, your payment goes up 8% every year you wait to start drawing until age 72. So bear that in mind. There are certainly circumstances where it might make sense to take it early, but know one can tell you that without knowing more about you.

@Cecilia Cave

Eh, I'd be hesitant to allow them to violate the lease. That is a slippery slope. 

Are you sure it doesn't say no more than 5 days without prior written permission from the landlord. If that's the case then it would depend on the tenant and circumstances. A good tenant with extenuating circumstances, I would probably allow it. An OK tenant that is one and done, I might allow it with some sort of compensation. A bad tenant, sorry no go. 

@Aaron Parkan

This is a rough calculation, but yes, they are talking about the interest paid on the loan secured by the property.

@Tim Greenfield, it obviously depends but I will list some of the considerations. I'm assuming these are SFHs. So, if you sell them as a package you will be dealing with more sophisticated buyers which can be both good and bad. There will not be any emotion involved in the sale, but your properties will be valued predominantly on their income. It will be cleaner since there will be one buyer and yo can unload the whole thing at once. They may, however, want a discount for that. Typically you can get more for SFHs by selling them individually because you are dealing with home buyers, not investors. They don't care what it will rent for. They houses will be valued more based on the sales comparison approach than the income approach. 

So I would start by estimating what they should sell for based on the two different approaches and then weigh the pros/cons to see if the intangibles outweigh the price difference. 

@Chad Crego, it really depends on where you are at. And it varies town by town depending on who administers the program. I know some people who swear buy it. It can be a pain qualifying your property and passing the inspection, but they look at it as rental insurance because the government will pay even if the tenant stops. I have property managers recommend that I allow it because it is so hard for the tenants to get their voucher they are very careful not to lose it. I have had other property managers say to run away because it is very hard for tenants there to lose their voucher and there are no repercussions on them or recourse for you if they trash your property. Bottom line, it is kind of a location specific question, but I would not dismiss it out hand. It can be a very good deal for the landlord and tenant in the right area and under the right circumstances.

@Bryan Rodas, yes it is better not to get your license. As mentioned several times, while it may be possible it significantly complicated wholesaling. It's a minefield that is very easy for you or your broker to get hurt in. Besides, you've talked extensively about wholesaling and not at all about actually brokering property. The license as nothing to your wholesaling, it only hinders it. So if you aren't interested in actually working as an agent, there is no reason to get your license as a wholesaler.

Totally agree. I've never met an HML that would do this. It completely violates their business model. Too much regulation and too much risk.

@Bryan Rodas, yes that is exactly what I said. That is not the point I was trying to make. The point is that it must be 

abundantly clear to the seller, not just to you, and your broker needs to be OK with it.