All Forum Posts by: Jay C.

 Hi Jaron,

That's also my mindset, to focus on the buy/hold strategy. This was an interesting property has it has a mother-in-law-suite so it's currently being rented as well as the house is. The cash flow is $1771 after Taxes, Insurance, mortgage and HELOC payment. It's higher currently due to a 6-month lease.

Hi Andrew, I'm a buy/hold investor and I plan to hold onto it for a long time. Could you provide your thoughts on how to keep a decent cash flow by keeping the HELOC with a variable rate vs locking in the rate for 20 years?

My plan was to cash-out refi to pay off the HELOC, but that will need to take a back seat as the interest rates are not higher than my mortgage and the HELOC. I could also save the cash flow and pay off the HELOC with the cash. I understood that Prime rates don't rise quickly, but can rise slowly in a decade as demonstrated historically.

 Hi @Walter Pineda,

Using a HELOC was a great way to fund a rehab. I did notice that Pen Fed in particular was finicky with cashing checks. Several of my contractors weren't able to cash the checks from Pen Fed due to electronic ACH from the credit union to another bank. To get around this, I moved the HELOC funds I needed to pay the contractors to my personal account and paid from there. 2 extra steps, but not too bad.

Best wishes on your rehab.

 Hi Kerry,

I got my HELOC on our first home that became our first rental property after we moved out. Pen Fed allows HELOCS for a rental investment properties. After studying this chart of Prime rate changes over the past few decades, I can say I'd rather pay the Prime Rate that is variable and cash flows better than, pay down my HELOC and kills my cash flow by $800.

Hi all,

I purchased a rental house back in Dec. at a low interest rate and using a HELOC for down payment and rehab costs. With interest rates rising and those of us with HELOCs with variable rates, what's the strategy that would help a Buy/Hold investor to weather these economy for the coming years? I wanted to do a refi cash-out after my rehab, but that took 2 months longer than anticipated and the rates are not favorable for me to do that. Besides...I'm not sure I could get what I need from a refi cash-out to cover the mortgage (1st lien) and the HELCO (2nd lien).

Details of the financing below:

Purchase price: $255K
Mortgage: 3.0% for 30 years
HELOC: 5% (as of today) for an 10 year interest only payment
Rehab costs: $80K
Monthly mortgage/taxes/insurance is: $2395
HELOC is : $433 (as of today)

I have the opportunity to lock in the HELOC rate 3 times in the life of the Loan, but it would up my expenses.

Here are my options with the HELOC:
1) Interest only – option
30 year calculation (360 months)
Use the current prime rate, add in your margin 1.5 to get the rate, and only look at your Interest portion to determine your minimum payment

2) Rate lock - option
Will be 20 years (240 months) of principal and interest payments
Rate = current prime rate, + your margin 1.5 + HELOC current lock in margin .75

Please offer your thoughts as I'm sure I should lock in at whatever the interest rate is now, but it would up my HELOC monthly payment to $1050 for 20 years. Or should I just pay the interest only mortgage that adjusts with the Prime rate.

Thank you

 Hi Taylor! The positive is that being in this same boat isn't a sinking boat. :)

The property does cash well and I'm thinking I should lock in the rate at 6.25 with my HELOC for the time being, it would up my HELOC monthly payment to $1050, but at least I'm not just paying interest only for 10 years. I'm just not all that excited about taking about $800 from my monthly cashflow to do it. And then the "pay off the mortgage vs cash flow" question comes in....

I was able to get a Pen Fed HELOC on our first house we lived in and made into a rental for the past 6 years. That was the only credit union I got to give a HELOC on a investment property. Best wishes on your adventures.

Hi all, 

I purchased a rental house back in Dec. at a low interest rate and using a HELOC for down payment and rehab costs. With interest rates rising and those of us with HELOCs with variable rates, what's the strategy that would help a Buy/Hold investor to weather these economy for the coming years? I wanted to do a refi cash-out after my rehab, but that tool 2 months longer than anticipated and the rates are not favorable for me to do that. Besides...I'm not sure I could get what I need from a refi cash-out to cover the mortgage (1st lien) and the HELCO (2nd lien).

Details of the financing below: 

Purchase price: $255K
Mortgage: 3.0% for 30 years
HELOC: 5% (as of today) for an 10 year interest only payment
Rehab costs: $80K
Monthly mortgage/taxes/insurance is: $2395
HELOC is : $433 (as of today)

I have the opportunity to lock in the HELOC rate 3 times in the life of the Loan, but it would up my expenses.

Here are my options with the HELOC:
1) Interest only – option
30 year calculation (360 months)
Use the current prime rate, add in your margin 1.5 to get the rate, and only look at your Interest portion to determine your minimum payment

2) Rate lock - option
Will be 20 years (240 months) of principal and interest payments
Rate = current prime rate, + your margin 1.5 + HELOC current lock in margin .75

Please offer your thoughts as I'm sure I should lock in at whatever the interest rate is now, but it would up my HELOC monthly payment to $1050 for 20 years.
Thank you

Have you looked at PenFed? Not local to Dallas but they are investor-friendly and have done HELOC's on Investment properties. I currently have one with them.

Thank you Mike for your input and help!

Hi Angie. I am looking at Tyler for a rental property as well. Had a couple questions if you don't mind, seems like you know the area well. I'm looking at the Mid-town area, east of TJC. Seems like a good area with the Jr. College and University Texas at Tyler Health, for student rentals or Traveling Medical Personnel rentals. Are you seeing this to be a good, safe area for that? And what is the average rent values in this area? Thank you. I appreciate your time.