All Forum Posts by: Greg Worzalla

@Jaysen Medhurst, numbers will look like this:

$40K HELOC (assuming the current 3.75% doesn't wildly in 15 years)

5 years @ $134/mo (draw)

10 years @ $405/mo (repayment)

$40K Cash-out Refi (does not factor in the closing costs, currently looking at my current mortgage bank and personal credit union bank)

$331/month more than my current mortgage payment

I will be walking through the properties tomorrow to get an idea of maintenance/repair costs and other details, after that I will analyze the deal closer to see what kind of income I can divert to repaying the HELOC back sooner. Thanks!

With the low refi rates out there, I'm wondering if this is now the better option to finance my first time rental property. Needing $40K for the DP, if I use my current HELOC with a 3.75% rate (assuming it says around this) it seems I would be cheaper to do the refi at 2.75%. I know the closing costs could bump the refi payments a little when spread out over the term. The big question is the 5yr draw period on the HELOC would be a lot less until that period is over. I know I've read that you use the draw period until you can refinance the investment property and take the money out of that to pay off the HELOC, but I would be afraid that when that time comes, the rates most certainly will be higher than they are now and I will not want to refinance the property. The numbers are below for more analysis. Thanks for any and all input. I honestly have no idea which route to take on this.

Jaysen-

Not owner occupied, I will continue renting all 3 apartment units and renting the commercial space.  I have not walked through the place yet, I am scheduled to tomorrow if that holds up.  Possible the commercial space could be converted into a 4th apartment.

I will certainly check out all options of financing with my different lenders, including an FHA loan if applicable.

As for the cash flow, I apologize for the incorrect use of terminology.  I meant the rent coming in is $2300/month.  Taking away taxes, sewer/water, maintenance, and other expenses, I'm probably looking at $1300 left for the P&I.  I will post the analysis after the walk through and I have a better grasp of other costs.  Some of the advantages were a new roof & gutters, new boiler and furnace, new concrete walk to help defer some bigger expenses down the road.  They have it listed for $220k, but it has been on the market for almost a year.  If they would entertain a lower offer, it would be very enticing (not sure they will as I assume it is generating cash and they may as well just sit on it until someone bites closer to their offer, but what do I have to lose...).

Hello all-

New to BP posting but big reader of the website (soon to be Pro). Have a question that I believe I know the answer to, but if I'm looking at an investment property that has 3 apartments and 1 small commercial space (salon at the moment), I assume I will need to secure a commercial loan versus a residential loan for this property, correct? Still crunching the numbers, but cash flow is $2300/month and may be able to secure the property for $180k. Lots of expensive improvements/upgrades done in the past 6 years that would help offset any future big ticket expenses. The big thing I am not fully aware of is the cost of a commercial loan versus residential as up till now, we were only looking at SFH or duplexes. Thanks for all responses!