All Forum Posts by: Account Closed

You have to pay the seller the $100k you still owe him on the first mortgage (this happens at closing of the refi, so that the new mortgage is now in first position).

You pocket $12,500, minus closing and origination costs.

The seller is paid off, and now you start making payments to your new lender, often with a 30-year fixed rate fully amortized loan.

For a deeper dive, see https://www.biggerpockets.com/...

A HELOC is really only for owner occupants (as a general rule, banks don't do HELOCs on investment properties). But for the sake of this explanation, let's assume this is now your primary residence. Many banks will do a higher LTV on a HELOC, some up to 90%.

So let's say that a year after the above refinancing, you owe $110k on the new mortgage, but the house is now worth $165k.

$165k x 90% = $148,500.

Minus the $110k you owe on the first mortgage, you have $38,500 in equity you could potentially tap with a HELOC at 90% LTV. So if you put a HELOC in place, your debt would look like:

$110k first mortgage

$38,500 HELOC (second mortgage)

The nice thing about a HELOC is it doesn't cost anything until you use it, and it's there when you need it.

Assuming your DTI and credit score allow for it, you could pull out $38k from your HELOC and use it as a 25% down payment on a new $152k investment property.

Thank you so much, it makes total sense. So I can simply go to any local/small bank of my liking and investor-friendly and refinance the property?

Lastly, do closing costs and origination costs go to the seller (bank) or how does that process work?

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Phoenix, Arizona

How would you seller finance the following opportunity?

PP: 489k

Down: Seller wants 130k

Term: 7%, 3-5 years

COE: “ASAP”

Seller owes 105k on the mortgage.

This is in Phoenix, AZ near the Arcadia area in a developing neighborhood. I know the area well and the potential appreciation after upgrades is attractive. I’m not sold on the terms, though, and am curious how you would negotiate this deal?

My lucky number is 420k. Wholesaler told me the seller “desperately needs cash asap.” but I’m on the fence about anything I’m told.

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I just finished reading this incredible book on creative investing strategies, and left me with a lot of productive questions.

One being the following – When you seller finance a deal, how do the HELOC and refinance processes work? Would definitely appreciate any clarification I could get on this.

Thanks!

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Phoenix, Arizona

Thanks for the reply! I have been using both function on Excel, but I am still getting a higher %.

So it's a bit frustrating at the moment since the examples in the book do come out correct when using the XIRR function.

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What is the IRR of an investment that costs $75,000 up front, earns you $22,000 per year for four years, and then generates $115,000 at sale?

This is from the "Real Estate By The Numbers" book by Dave Meyer and J Scott.

I was able to choose a discount rate % that would make the NPV greater than 0, which I would accept the investment at that point. Though, in the book the answer to the IRR=11.02 and I truly want to understand how they calculated it.

0 Votes

All Forum Posts by: Account Closed

Account Closed has started 15 posts and replied 35 times.

Post: Refinance/HELOC on a Seller Finance Deal

Post: Seller Finance - Deal Structure Question

Post: Refinance/HELOC on a Seller Finance Deal

Post: Calculating Internal Rate of Return (HELP)

Post: Calculating Internal Rate of Return (HELP)