All Forum Posts by: Jared Bouzek

@Ernesto Diaz Welcome to Bigger Pockets! You really have three main options to access your equity in your home:

1. As stated above you could use a HELOC. The advantage of a HELOC is that you can likely access a greater amount of your equity and have a revolving feature. In other words, if you were going to flip or do any other type of REI with a shorter time-frame, you have the option to draw money from the line repeatedly. This also allows you to choose how much you want to draw at a given time. The downside is that the rates are generally going to be higher than a standard conventional mortgage (aside from an introductory teaser rate) and the rate is probably variable and will increase as rates continue to move up.

2. Cash-out refinance. This would likely be your best option if you're looking to lock in a low interest rate over a long time period. This would give you access to 75-80% of the value of the house depending on if it is your primary residence. So the advantage is you likely get better lending terms than a HELOC. The downside is that you'll have to choose how much equity you want to pull out and stick with that because you won't have a revolving line.

3. Sell the house and re-invest the equity. This might be an option if the house is in very poor condition and you can't justify the investment to fix it up. Or maybe the house isn't in a good area of Colorado and you believe there are better options to invest your equity. 

Ultimately, the smartest thing for you to do is identify your goals for REI. Then focus on the 1-3 strategies that can both accomplish your goals and incorporate your experience level. Also think about how hands-on you want to be. The strategies you listed can have a wide range of time input from you depending on how you approach them.

The podcasts are a great resource, but dig into the forums if you haven't already. There are many people on these forums who have had the same questions as you.

@Mike Bonadies It really comes down to your individual loan officer. "Direct" lenders blow deals just like anybody else. 

As Chris Mason has regularly said on these forums, if any one type of lender was truly light-years better than any other type, the market would dictate that Brokers would fade away and Direct lenders would be the accepted standard or vice versa. That simply hasn't happened because it's just not accurate. Each type of lender has a slightly different process to get to the same end point. 

I'll probably take some heat for saying this, but I'll say it anyway: loan officers who have to send every one of their files to an underwriter to have it pre-underwritten are lazy and probably don't know their guidelines, so they have to lean on an underwriter to help them with their file. Yes, I'm a broker and I can say that I have never blown a loan in underwriting because I know my guidelines and I clear up any questions ahead of time, so that we limit any surprises.

Find a loan officer who has an expertise in real estate investing since that is your interest. They should be transparent about their processes and structure. For instance, I have no issue with telling people that I am not a renovation specialist, so I would rather refer them to somebody who does specialize in renovation loans to ensure they have a good experience. Also make sure they communicate often and at your level of understanding.

The whole Direct vs any other type of lender is much more about them getting a loan than doing what is best for you.

@Vanessa Thiele To echo some of the above, I have seen a seller sign a lease with a new tenant during the closing process here in Colorado. You just want to make sure you are on the same page with the seller if you decide to go that route to make sure you've screened well. The time I saw this happen did not turn out well because there was no communication between buyer and seller what was going on. That tenant turned out to be an eviction down the road.

Hey @Ty Kayton. Welcome to Bigger Pockets. It sounds like you're getting prepared well ahead of time which in my mind is never a bad thing. There's a lot of knowledge to soak up here between the forums, blogs, podcasts, and much more. I'm sure your construction experience will be invaluable for REI. Let us know how we can be a help to you.

@Will Foster If you're just planning on using standard conventional financing - which is what it sounds like - don't overthink things.  You don't need to impress your loan officer by any means. Most lenders will have a way for you to upload your documentation into their system. Having everything in a clean pdf format is helpful. 

Where your lender is physically located is up to you. Much of what we do can be handled online and people can be licensed in various states. If you do value the face-to-face interaction then you might consider that. Otherwise, you might be better off developing a relationship with a loan officer that will help you with REI both now and in the future as you try to acquire more properties.

@Bryan Cork You haven't necessarily missed anything from the podcast. What they typically don't explain is that those rules are not applicable in the same manner to all markets. The 2% rule would typically apply in high cash flow markets with little to no appreciation or in "war zone" areas. Our markets are much more balanced and really lean toward appreciation, so as you've experienced, the 1%, much less the 2%, rule doesn't really apply in our market. There are many factors that go into deciding what is a wise investment, so don't rule something out just because it doesn't fall in line with a given rule of thumb. Decide what your goals are and then determine how investing your funds can help you reach those goals.

@Gregory Flores, Jr. Welcome to Bigger Pockets, and congrats on getting into your first house-hack. As you've already discovered, you've stumbled across the best free resource available to real estate investors on the internet. Good luck scratching that itch. :)

@Chrissie E Lewis If you're wanting to maximize the equity you can draw from your current home, it might be best to wait until you have everything in tip-top shape for the appraisal. You shouldn't need an inspection unless the appraiser notes severe structural damage that would require a specialized inspector to look at.

@William Bauer Welcome to Bigger Pockets (officially)! It sounds like you've put a lot of effort into educating and preparing yourself to take action. Good luck getting started.

Grant Shipman I agree completely with Bill S. It's really not your loan officer's business that you plan to long-term or short-term rent your space. If you're purchasing as a primary residence, the only concern should be that somebody on the loan occupies it for at least a year to satisfy the owner occupancy clause.