All Forum Posts by: Gabe T.

@Hilary Graves

I think it's worth it. It's possible, or even likely, that you might target a property over the next 10 years (not sure what the draw period of your HELOC is), and not be able to afford it unless you get the extra funds. In the grand scheme of things, $2k isn't that much if it means missing out on a good deal. I also paid around that cost to get a larger HELOC limit. I could have gotten even more with an appraisal but I decided not to, and regret that decision.

@Jody Tims

You'll often have some closing costs for HELOC if it's a large amount. Depends on your lender.

Yes, if you refinance, there may be closing costs, but ultimately a couple thousand is relative compared to interest payments for 30 years.

HELOC is great if you want a reserve line of credit just in case, or if you don't know what you're going to spend on yet, or if you are going to "fire reload fire" with investment properties.

@Jody Tims

If you know what you’re going to spend it on, and are ready to spend soon like you are, then I think a cashout refi is better.

Right now rates might be lower than a few months ago because of delta variant, so you never know. Yes cashout has a slightly higher rate, but a HELOC usually has a variable rate, and rates are projected to increase soon. So unless you are planning to payoff your HELOC quickly, ultimately a cashout could save you a lot more on interest.

Another point, at least in my experience, you'll get a cashout refi finished faster than a HELOC. My HELOC application went to the bottom of the pile for months. And it was the same with other banks and credit unions when I asked around.

@Chen Zhou

Is this on your primary residence? I just spoke with figure.com last week and they said they do not have a product for investment homes yet. Would be great if they ever do.

@Kristin Haug

I was told by a lender that I could borrow cash from family, delayed refi, and pay people back. So I went ahead and did it, and then realized that there was no program that I could find where gift money was permitted for delayed refi. I could only get back the 100k that I put in of my own money, which was 25% of purchase cost.

So now I’m stuck waiting 6 months for a cash out refi. The terms are not as favorable as delayed refi. But you’re friend is correct, at least with the banks I’ve spoken to: 6 months seasoning after purchase to cash out.

@Wei Jie Chin

I agree with doing a lot of research on this. I was told “sure we do it all the time,” and ultimately it didn’t work out for me. I was told that people get money from family, then do a delayed refi, and pay people back.

Yes, it’s a great option if all the money is YOURS. If you’re going to use a hard lender, I don’t know how that will work. If they are on the deed as well, it might work. Gift money was not permitted.

But it’s not the end of the world. I’m waiting a few more months to make it to 6 months to cash out refi. Terms are not as favorable though as delayed refi. Good luck!

@Keith A.

I’ve heard mixed things about a 4th room. I have a 3br2ba rental, with a spare room that was a converted single car garage. When I bought it it was closed up but not finished. I ended up finishing it since it looked sloppy, but my property manager advised to advertise it as a 3br2ba with a spare room, instead of advertising as a 4br. The reason being that very large families can look for 4br homes, and the increase in rent isn’t very much. Where I am, max occupancy is 2 people per room plus 1. So you could potentially have 9 people in that home.

I'm now looking into building an ADU, and was choosing between a 2br2ba or 3br2ba, both 1000sf. Property manager advised me to go with 2br2ba, by the same thinking.

Would be very interested to hear what the community thinks about this.

@Kenny Tan

Just a heads up on delayed financing. The banks I’ve talked to will not accept gift letters right now. If you season the funds, it needs to be 6 months. The banks will only loan the amount the title holders put in themselves for delayed financing (so perhaps you or your partner could be on title as well). If you wait 6 months, you can do cash out refi, it at a higher rate than delayed financing.

Don’t understand what you mean by “half price”.

@Yulyana Karpava

Buying a cash flowing property in Sacramento area is possible, but it's not easy. It's rare to find a cash flowing property that's a straightforward turnkey SFH or MFH. Like was said earlier, need to look for "non traditional" properties. Look for unpermitted ADUs, "granny units", detached large garages that you can convert to ADU. Or go the route of a property that needs a lot of work and is significant discounted. If it's unpermitted, it can be more problematic to get conventional loans, but this is why it's able to cashflow. Similar to a "handyman special" which may have difficulty getting loan. Also with 5% down, it will be even more difficult to cashflow later given the higher mortgage payment. Usually for investment properties you're looking at 25% down.

Did you find anything else for your purposes?  I’m also looking into the same thing.