All Forum Posts by: Steven Griffith

I just closed on a HELOC mid-April on my rental - Pentagon Federal Credit Union (PenFed). I know of several others who have used them for HELOCs on rentals. You do not have to be military to get an account.

Terms were 80% LTV on rentals, 10 year interest only draw period, 20yr repayment period. Rate is variable, currently at 4.75%. PenFed paid all closing costs. If you close the HELOC acct completely within 3 years, you have to pay back closing costs. There is an annual fee of $99, unless you've paid that or more in interest, then the fee is waived .

Great experience thus far with PenFed - I highly recommend!  

TD Bank also does it, although the LTV wasn't as good when I was looking for a lender. Wells Fargo told me they used to, preCOVID. Not anymore.

Any other questions, let me know!

Hi @Ben Kirchner

Thanks for starting this post - I appreciate the chance to see what's working for everyone else! I don't know how much work you want to put into it, but I'm closing on a property here in 2 weeks that should bring in just over 1% in Chapel Hill. I found the property by checking Zillow, FSBO, etc every morning and looking at what new properties are listed. I've been doing this for roughly 2 months now, and have had several offers turned down, not accepted, or that I've backed out of after inspection. I specifically look to invest in Charlottesville VA, San Antonio TX, and Raleigh-Durham-Chapel Hill areas.

In this case, I saw the listing at 9:00 on Zillow in Chapel Hill, ran the numbers, called the owner and scheduled a tour, liked what I saw, and made an offer in the same day. It's worth noting, I think, that my offer is using traditional financing (conventional loan). I have alerts set up and spend about 10 minutes each morning looking at what new properties are available (if any) that meet my criteria. I'm aware of 2 other investors in Chapel Hill/Carrboro who have used the same approach: 1 acquired a property in Carrboro and is currently using it as a STR, and the other is a 'traditional' long term rental.

The property I'll soon be closing on is a townhouse - for sale by owner - located on two buslines near UNC and walking distance from downtown Carrboro.  The owner is currently renting the downstairs efficiency 1bd/ba for $750.  We'll be allowing the tenant to stay for the first year, perhaps 2, and then do some renovations downstairs and up the rent to market value - at somewhere between 900-1000.  I'm purchasing the house for $241,000 and will put about 12K into it to do some cosmetic updates, upstairs.  I'll then rent out the upstairs 3bd/ba for $1600-$1800, based on what other townhomes on the same street are renting for now.  So, it should bring in somewhere around $2350-$2550 per month for the first year, depending on the final rent for the upstairs unit, and more down the road when I update downstairs.  Again - I'm scheduled to close in two weeks, and everything seems to be on track so I'm sharing but I also recognize that nothing is set until the lease is signed.  I did like seeing the news that students will be back in person this Fall at UNC, although I'm hoping to get another graduate student(s) in, similar to the downstairs tenant.

I'm not sure if you regularly check the various housing sites or rely on your realtor (I, too, have realtors send me regular MLS updates) - and I'm not sure if the strategy I used would really help fill the pipeline you're looking for - but it worked for me. My other rental property is in Charlottesville VA. I've made several offers in San Antonio, but haven't been able to get one accepted their yet.

Hi @Michael Baum,

I don't have any experience with vacation homes specifically (so apologies if this is a dumb question), but if your home has doubled in value and you're still paying PMI, is there any reason you haven't looked at refinancing the home, and using the new appraisal value to get rid of PMI? Based on the new value, you should have more than 20% equity, even if it's just because of rising home values. Maybe your rate is too good to want to refinance and your PMI is low, or it doesn't make sense to pay closing costs - just curious!

@Mario Am

Hi Mario,

I opened a HELOC on a rental of mine with PenFed Credut Union about a month ago, amidst everything going on with COVID19. 80%LTV, 10/20 draw and repayment periods w/ interest only repayments during the draw period. Very easy process - took about 3 weeks from first inquiring to Closing. Shoot me a message if you have other questions!

Also relevant to your initial request, my job keeps me quite busy and I won't be doing any of the work - I'm hiring out nearly all the rehab.

in terms of forbearance, I've heard some discussions that forbearance at certain banks may turn into deferrment or adding the missed payments to the end of the loan. Not sure how true that is, or how widespread, but in general my impression is banks would rather have someone actively paying on the loan rather than own a property with no income. Plus, there's no telling what additional legislation may be passed, so I feel counting on a future 'wave' of foreclosures is risky in and of itself, since it may not come to pass. Plus, lenders are tightening their lending criteria now, not loosening, so it may only get harder to buy a rental SFH with a conventional mortgage. It would be a shame to wait, find something 6mo down the road, and then lose out bc financing is too tight and unwilling to 'risk' a rental.

Hi @John Williams

Just to second the general consensus, don't wait (IF you have found a good deal). There will ALWAYS be another reason to put off starting investing. 'Waiting' for a market drop, too much of a seller's market, some other life event..... there will always be something.

While I can't speak to the Raleigh-Durham market specifically, I'm actually in the process of closing on a deal in Chapel Hill right now - a townhouse with a downstairs efficiency just off downtown Carrboro, so I'll be treating it like a duplex. Cash flow is awesome. Once I finish rehabbing the upper unit, I'll actually be posting it on here, as it is my second rental. I found the deal on Zillow, because I was checking EVERYDAY. The deal was not on the MLS, as it was listed For Sale By Owner. I cotacted the owner the morning she listed, virtual toured the property (COVID19), checked w the HOA regarding rental policies, made an offer based on my numbers, and she accepted. I am buying it direct, without a realtor. I was able to get in w a contractor the same time as my inspector so was able to see it in person, get a rehab estimate, and get the inspection done all before DD ended. The numbers still work, although rehab will be a bit more than I was expecting.

Deals in our market exist - you just have to be persistent, be willing to act fast, and look everywhere. All of that being said, make sure you're numbers work. If they do, and your goal is cash flow, why wait?

Definitely following this post, as my wife and I are looking at the same thing.

In brief, I'd say it really depends on who your target renter is, as each part of the OBX caters to a different clientele, and each comes with Pros and Cons. Personally, we're looking in Duck, Southern Shores, and Kitty Hawk. If you haven't priced out insurance, give an agent a call to get a quote - the number is much bigger than I was expecting and can really cut into your cash flow, largely due to flood insurance. There are actually some great insight in previous forum posts about this exact topic. If you have trouble finding them, shoot me a message and I can share a link! Good luck!

Hi @Chris DiMaio

I just did this on a rental property of mine. PenFed had the best rates that I could find and is who I used. They're in both NC and VA and they post their rates online so you can check before calling. The whole process took about 3 weeks, in the midst of this pandemic.

Hi All,

I wanted to reach out to the community and ask if anyone had any recommendations of contractors that you've worked with located in Charlottesville, Virginia?  I've recently purchased a house that I intend to renovate and then rent but am having a hard time finding contractors willing to work with me once I mention that the ultimate goal is to rent this property.  Does anyone have any recommendations?

I already own one rental property in Charlottesville, but unfortunately the GC I used before has moved and is no longer in Central Virginia.  I'm specifically looking at renovating the kitchen, bathroom, floors, and basement flooring.  Any recommendations?

@Christopher J Metzger

Can you share some more details? Address, rent per unit, unit size, etc?