All Forum Posts by: Jason Crow

@John G. Will for sure have the numbers side of it. We have flipped several houses in the past. The problem is we leveraged all of that cash into our current business. Now that the housing market has rebounded, we want to get back into it.

@Account Closed I am not sure Victoria's Secret has anything in my color, but that may be the key piece I have been missing ;)

@Will Barnard Thank you for responding. You are the person I have been looking for. I haven't found anyone that has personally done this, or those that have simply don't talk about it. That in and of itself was part of my hesitation. If it was as good of a deal as it looks on paper, why aren't more folks talking about it, ya know? Our ultimate goal is to get enough flips done that we have the money to not borrow, but then I guess that's probably everyones goal. I have found some good rates on NOO loans, but then there are closing costs every time we do it, as well as putting most of our cash into the DP. So basically, if I am hearing you correctly, LOC is great to use (assuming I fully vet the flips), but avoid it for long term holds. Thank you for that direction!

@Thomas S. Thank you for the break down. I guess I am mostly concerned because I haven't been able to find anyone that has actually done it. It sounds good on paper to me, and if it was just me I am in. However, I have one of those wife things that is a particularly hard sell, so I have to have my ducks in a row when I hatch up one of these plans :D

Do you happen to know if banks will lend against an investment property (we own it free and clear as well)?

@Brent Coombs We are able to borrow conventionally, but it would be considered an investment loan because we wouldn't occupy it. Rates would be higher, plus downpayment. My hope is to avoid the downpayment, because that takes available cash reserves that we could be using for renovations or moving expenses. I am not as concerned with the 4/10 issue, because even if we went conventionally for the first couple, we would likely shift to a portfolio lender once we were up and running.

I feel like I have largely decided the HELOC is the way to go based on money saved from closing costs and interest, but considering we have worked so hard to eliminate all debt on our house over the last 7 years it is scary turning around and taking money against it.

Any idea if using our rental to secure a LOC is feasible?

Michael, Thank you for welcoming us! Actually, medical issues is why I am on here as well. I have had 4 knee reconstructions in just over 18 months, so have basically been unable to get around like I once could. Owner financing might be hard because my wife and I got really good at actually taking houses that were scheduled for tear down (usually by developers), and offering to move them so that the developer didn't have to pay to clear and dump the materials. Many times we can get the houses for free and just simply need cash to pay the house movers. I need access to cash because even though we have a lot of assets, we aren't particularly liquid. We would also prefer having the cash available to do necessary repairs and updates after the house is moved. The LOC has zero closing costs and we only pay interest on anything we borrow - similar to a credit card. The big difference being we would have to use our house to secure the line of credit. The idea is that we only need access to the funds during the time we are renovating/moving the homes which is usually 2-3 months. Then we immediately repay the money with the sell of the house. A good friend of mine got one recently and his rate was below 3%. Rates have gone up since then, but not substantially so I would suspect we could get in at 3-4% max. Most the investment loans I have looked at are 8%+ and hard money is 15%+. We would also have closing costs with all of those loan options :/ The other thing that I thought of is using one of our rental houses (it's completely paid for) to get the LOC too. Because it is an investment property, I am curious if the banks would extend a LOC and if the LTV is lower, rates higher? Thank you for the good advice. We are chomping at the bit, but you are right we need to make sure we take a practical approach to this.

My wife and I own a house and land worth about 1 million, free and clear. We are in a hot market in the Austin area. We have previously flipped homes and owned a few rentals prior to the housing crash. I decided to get my real estate license this past year so we could get back into it. When we got out of the industry, we invested in a new business that is still running and profitable. There is still a note on the business though. We have paid off pretty much all existing debt we have, sans the business. We want to get back into flipping and rentals, but want to avoid hard money or investment loans, if possible. I have spoken to a few lenders and financial advisors and HELOCs have come up. My idea is to take out a line of credit against our home, so we can purchase properties with cash, rehab, and resell. With the funds, would pay off the draws against the LOC and then set aside remaining cash so we can eventually build up a war chest big enough to not have to utilize the LOC. I am curious what the thoughts are on this approach. What are the pitfalls? Advantages/disadvantages? Has anyone utilized this strategy? Interest rates are low, I could avoid constant closing costs with investment loans over and over, and the cash would feasibly make my purchase offers more attractive. The other idea I had was possibly using the equity in my business (we owe about 650k, it's currently valued around 1.6-1.7 million). The business is land and a brick and mortar building. I think my dilemma might be that a small portion of the note (200K) was provided by the SBA, so they may have some sort of guidelines restricting us from borrowing against the business. Anyhow, feedback on if that is a better approach than utilizing my home.

In another thread, someone mentioned also doing a refi/cashout for long term holds which would pay off the draw as well. I am aware of the 4 loans issue. However, we previously ran our flipping business under an LLC and would very likely look at a portfolio lender should we decide to go that route. I am more just curious if that scenario is also plausible, as the OP never posted what came of his situation.

Thank you in advance for any advice or feedback you can provide.

Jason!

I am in a similar scenario. Have a million dollar home, free and clear. Have done flips and long term holds in the past (prior to the housing crash). When I got out, invested in another business that is profitable, but still has a note on it. I keep most of my available cash tied up in that venture. So, without selling that business am looking for a creative way to get back into investment territory and HELOCs keep coming up from various financial folks (lenders, advisors, etc) that I have spoken to. I think most of mine will be short term holds at this point, so I don't know that I would even have to worry about a refi cash out scenario, but would be helpful to know. I may open a new thread as this one is so incredibly old, it doesn't look like it has been discussed in awhile.