All Forum Posts by: Account Closed

There are many options to leverage for more houses. It depends if you're buying right. Minimum at least for cash flow. Ideally for both cash flow and extra equity. If you buy wrong, it will tap out of financing quickly. (Lease to show lender that you can offset the mortgage at a minimum). 

It isn't easy acquiring more. You need investor friendly lenders who can count your rental income, dti, etc properly. A mid to high paying day job career helps a lot imo. A 401k or similar can be counted for 6 months reserve per property and even a low interest down payment loan if needed, which should only be for short term. Just one example of a reasonable path to rentals.

Unfortunately it is possible to become over leveraged if you look and try enough. Sometimes it's good to just take a break and pay some of it off. Which should be easy with a high paying day job + decent cash flow from rentals.  Better to use leverage responsibly and err on the side of caution.

I haven't found anything halfway decent around here for 40k or under. There is a lot of hype around here for these houses. Also a lot of tired landlords trying to sell their empire of crap on MLS or Craigs. Many times in packages. They rushed in and got duped. These houses are too old to be standing and full of toxins that cost a fortune to remediate. They're too far away from any decent paying jobs relative to at least 3x the rent. They usually have high crime. Flipping works and the profit is in duping future tired landlords. I wouldn't do it personally at least around my location.

@Akhil Kumar - You have the right idea. Get the HELOC now so you can then go to a lender and tell them you want to use it as 20% down. High 700s score is good.

Cash Out Refi has higher closing cost, but it's for long term borrowing. I got one for 3k closing cost on a 2-Unit Duplex rental.

HELOCs I got two of them for free on two rental properties. The only risk is the interest rate is variable and could jump, though it hasn't happened to me yet. They're also flexible and can be paid down/off and used again.

I would say definitely call around and get the best terms. Make sure you're still cash flowing well on every buy even with a heloc payment.

Primary Residence will get you better rates.

@Paul Winka - Not sure. But I got tired of calling around at the time. Didn't need another Heloc anyway. Ended up going for a Commercial Loan Cash Out Refi on the free & clear rental.

I believe Wells Fargo does a HELOC on 1st Position Rental, but the terms are not that great and low 60% LTV with fees and high closing costs. I have tried and shopped around before for 1st Position Heloc on a Rental. At least around here it's not common place without a rate hike and high closing costs. 2nd position Helocs on Rentals are very easy to get however and closing costs are usually covered. I have two 2nd Position Helocs on two different Rentals.

@Mike Webb - Would be interested in your wholesale listings as well.

I have 2-Unit duplexes built in the 80s or 90s. I get 300-400/door. I have one of them on the far south end right outside city limits. It make very good returns and is a quiet safe area. I can get high quality long term tenants with income over 3x the rent. I have two other duplexes in North Hagerstown doing just as well. I could go for maybe 2 more, but don't want to lean too heavy on Hagerstown.

Have to tread carefully investing in Hagerstown. There is a lot of speculation on **** hole areas and properties especially downtown blight. There is a lot of drug activity in downtown. It is a dumping ground for people released from the prison as well. There are many "Recovery" houses that will bring in failed addicts from outside. All in the back drop of very old blighted houses that should be razed. 

I stay away from downtown as well. I also stay away from the very cheap and very old properties. 

Within city limits is ok as long as it's a decent quiet area. You'll have to get a Rental License @ $75/unit per year. Also an inspection at turnovers, which is just a phone call away. I don't have any pre-1978 properties so I don't have to do the Lead Paint, asbestos, or other toxic inspections. I don't have to pay for samples and keep up with all that other stuff either.

Cash flowing well is very achievable in Hagerstown. There are decent long-term tenants as long as you put your criteria up front and provide a clean up-to-date place in a safe quiet area. It will attract the good ones.

This is coming from an investor who lives in Frederick (30 min away) and self manages.

I have done the BRRRR with the Refinance part as a heloc twice. It works. If you buy properly, the cash flow from the next rental will cover it's mortgage and the interest on the previous rental's heloc while still cash flowing.

The benefit to this is the helocs were free. no closing costs or appraisal. They're interest-only which means monthly minimum payment is very low. They're reusable and interest is only charged on what you use. They can be paid down with rental cash flow and day job quickly to be used as down payment again. They are also good as emergency funds.

@Jay Hinrichs - I would be glad to find more of those deals, but they are more scarce now at least around here.

@Matt Turbitt - I still have to talk to my commercial lender and others. I didn't know they would lend on broken foreclosed houses. Which of course would be rehabbed and either rented or flipped. The beat up houses I look for are within reason as well. They're not too old and not too broken.

Are there any good options to finance a beat up foreclosure aside from renovation loans or cash buy from a Heloc? 

The renovation loans are too pricey and require expensive contractors. Sure I can refi out after, but would have spent too much. HML is even worst. Heloc then Refi is OK, but my lines aren't big enough yet for a whole house around here.

Problems I've had before is that the house would "fail appraisal" so they won't lend on a beat up house.

I have purchased 2 foreclosures in the past with a direct lender for 30 year fixed, but the selling bank had them fixed to move-in condition before listing. They still sold to me well below market. Both are cash flowing well and needed very little repairs.