All Forum Posts by: Ivory Hayes

I think Shaun Weeks response was very informative, insightful and great advice.

Me myself, I am pro heloc. It can simply be used as your new checking account to pay off the monthly interest payment and to pay down the prinicipal all at the same time without having to come up with any extra money.

What I mean by that is... With the heloc option you and your wife can take all of the money that you earn every two weeks or every month, however often you both get paid, and put it all in to your heloc account. The first 200 (as the example given) will go towards paying off the interest for that month, then the other monies that you both deposited will be a principal payment. It goes directly towards paying down the principal balance. That money sits there, working for you by paying down that principal and it works for you by lowering the principal, therefore lowering your next month's interest payment simply because you now have a lower principal balance on the heloc. This happens every month might I add. Another thing I enjoy about a heloc is, if you need the money again for any reason at all in life, it's there for you to utilize. With a cash out refi you have to go through all of the paperwork again to apply for another loan and pay closing cost fees all over again and start all over from scratch on your 30 year mortgage getting you nowhere close to ever paying off your house and owning this asset. Well, no closing cost fees for you to pay on a heloc with most financial institutions.

If it's sounding a little weird over the text I'd be happy to break it down for you over a phone call if you'd like. Just reach out to me through a pm and we can chat. I'd like to add value to your situation if I can. That's what bp is all about right...

I hope this made sense.

Happy Investing...

P.S.- I forgot to mention... That the draw period is 10 years in most cases meaning you have 10 years to draw from this account and utilize the money any way you choose and you have that long to pay back the 50k with the terms of interest only before the pay back period hits with interest and principal payments, but you can refi the heloc at any point before that, just as you would a loan. Simply do the heloc process over again and your 10 year draw period is renewed where you can pull from your heloc and utilize the money at your discretion with interest only payments.

But the way that I'll show you to utilize your heloc account you're simply leveraging your paycheck to be the monthly interest and principal payment without having to come up with any extra money. The account should come with checks and a bank card so you can also pay all of your bills directly from this account. The interest accumulated on a heloc is based on the daily balance. So the longer your money sits in there without having to be disturbed, the less interest you pay when the bill is constructed.

Once again I hope this made sense. If not, just pm me.

Happy Investing...

Hey Carlos, I just sent you a pm

Most financial institutions provide this product and it's usually formed as a commercial loan. Simply inquire with a few for this product.

Happy Investing...

Hey Cory,

I'm not 100% sure how the process would go with purchasing as an individual but US Bank offers decent commercial products for for investors to purchase under their businesses. I'm guessing the biggest differences in guildlines would be looking at the borrower to qualify first instead of the property and it's income and putting down a larger down payment, if purchasing as an individual.

Anyway, give them a gander.

Happy Investing...

I agree with most of what has already been said here. I typically try not to stress myself out about the HELOC turning into a loan after 10 years because anytime prior to the 10 year due date you can refinance the HELOC and that basically starts you over on your 10 year draw period. That part isn't a very big problem to deal with. The main part of focus would be to calculate how much you can pay off within that first year at the lower interest rate. That would be the difference maker in my humble opinion. I believe the best way to go about this would be to utilize the HELOC as your new checking account and sit all of your monthly income inside it to reduce principal, which in turn reduces the amount of interest you pay and basically reduces your monthly payment every single month. As long as you're putting in more than you're paying out monthly, it's a great way to quickly pay down or pay off your HELOC and reduce your monthly payment as well. That way, your money is working for you, which stands in line with the reason we invest anyway, right... Have our money work for us and not the other way around. Just make sure your HELOC can offer you checks and or a debit/credit card to pay bills with.

If you need more info, I'll help as much as I possibly can.

Happy Investing...

Check with US Bank. If you're buying under your business there's a commercial product they offer that allows for 20% down.

I for one am in support of utilizing a heloc vs any other method of accessing cash. Loans just aren't a better product in my opinion. With a Heloc you can access and utilize the money over and over again without having to reapply for it every time you need it. The payments are extremely low because it's an interest only payment. If you utilize a heloc correctly and make it your new checking account, by sitting your monthly income inside of it that, it alone acts as the monthly payment, plus anything over the monthly interest payment gets applied directly towards paying down your principal. So the next month your payment will be lower than it was the month before because you're being charged interest on the remaining balance every month not the total amount of funds received. You basically have a diminishing monthly payment and more of your funds go towards paying down the principal every month and you can access the money right away if you need to. To me it's just a far better tool and strategy to use but again, that's just my personal opinion and everyone is entitled to their own.

Happy Investing...

A decent national lender has been US Bank. Check with them on their products. FYI, you might also want to look into a HELOC as well.

Happy Investing...

Try US Bank. They usually have a good heloc product.

Happy Investing...

@Nicole mentioned some really good points, as well as everyone else on the thread and one of them was having the pot of cash to recycle over and over. That being said, do yourself a favor and look into a personal line of credit (as well as the personal loan you mentioned) and do your homework on a home equity line of credit (as well as the cash out refi you mentioned), especially if the property will have lots of equity built in. This normally requires you to utilize the property as your primary for a period of time before utilizing it as a rental. However, both of these options allow you to rinse and utilize the cash again and again. Just food for thought.

Happy Investing...