All Forum Posts by: Jeremy Clarke

You have more than one option by using a Heloc, Heloan, unsecured LOC or I/O refinance. That will allow you to take out down payment for the new primary. You really only need 5% down on a primary in this market.

5% down is great and all for acquiring a house but not practical with interest rates sitting where they are to be able to afford PITI every month. I would be house broke at best, unqualified for that monthly payment at worst.

0 Votes

Denver, Colorado

Quote from @Brittany Guimond:

Hi Jeremy! I have a few clients in this exact situation in Denver right now. We explored cash out refi but just don't like how the numbers are looking, so we decided to go the HELOC route. We called around to a few different banks and I actually have notes I can share with you if you're interested, but ultimately decided to go with Security Service Federal Credit Union because they've got a 5.99 intro rate for 12 months and will loan 100% LTV. Since you'll be buying a new primary, you'll get to take advantage of the low down payment requirement, but might want to explore what 10, 15 and 20% looks like and what that does to your payment. The HELOC has a variable rate, so I recommend reviewing several scenarios with a lender to know what feels the most right for you and your lifestyle. I've got both lender and HELOC contacts I'd be happy to share, I'll shoot you a DM and we can chat.

Thank you Brittany! I saw your DM.

0 Votes

Denver, Colorado

So I own a rental property here in Denver. It has between $250k-$300k of equity in it at 3.25% interest rate. I gross about $1,200 a month after I pay the mortgage. Mortgage is $2,500, rent is $3,750.

I'm looking to purchase a primary residence in Denver but don't have the cash for a downpayment at the moment. I'm potentially looking to take equity out of that house to buy another. I'm concerned a cash-out refi isn't a great idea because of the current interest rate I have. What are your thoughts? Should I do a Cash-Out refi, see if i can get a heloc, other options I'm not thinking of?

0 Votes

Denver, Colorado

Quote from @Ben Rhodin:

Hey @Jeremy Clarke! As already mentioned this would not be possible. However, your quoted interest rate is really high. Is this a DSCR product or a conventional loan? I could believe that interest rate if it was a DSCR loan, otherwise, find another lender. I've got investment loan rates for my buyers hovering around 7% currently, and if you buy a primary you can get even better. One way to get a better interest rate is to assume the current loan on the property you are buying.

Also, what do you mean by "assume the current loan on the property you are buying"?

0 Votes

Denver, Colorado

Quote from @Chris Davidson:

@Jeremy Clarke nope not going to happen it is not in the lenders interest to do that. You could wrap your current house which would allow you to collect on a higher rate, but a straight sale sounds like it would be better as you could drop your loan balance on the purchase. Did you live in the home for two years out of the last 5? If so you could avoid capital gains.

Best of luck!

For sure! The plan is to sell. No i bought it as an investment property so i'll get hit.

1 Vote

Denver, Colorado

Quote from @Eliott Elias:

This is not possible. A 9% interest-rate seems high.

Yeah, unfortunately i'm in between jobs so it's a higher rate.

0 Votes

Denver, Colorado

Quote from @Ben Rhodin:

Hey Ben, thanks for the education! I'm going to check out a DSCR and see if that could be an option for me.

The reason why the rate he quoted me is so high is because my employment status. I am currently in between jobs so he said the rate is higher because it's a different product. I have great credit though. The plan has been, close on a property now and then refinance when rates get better and I find a job. Thoughts?

0 Votes

Denver, Colorado

Hello Gurus, this question may sound a bit odd but I have to ask. Here's my situation. I own a couple of homes in Denver. Both are now rentals. For one of them, I'd like to sell it to purchase another house, as my primary residence, in Denver in an area of town that i's prefer to live in. I currently have a loan on that property for 4.5% with a mortgagor. I know that my interest rate is tied to this house, but does anyone know if a lender would consider letting me sell that house and transfer the rate to a new address? Right now with my situation, I'd be looking at purchasing with an interest rate of 9.3% and that's just crazy. Appreciate direct answer as well as other creative solutions.

1 Vote

Denver, Colorado

I'm sure there are many threads about this so if someone could point me to one of them that would be great.

If i have property i can't avoid paying capital gains tax on, is it a loophole to just do a cash out refi and then a few months later sell the property?

For example, let's say i have a home worth $400,000 and owe $200,000 on the loan. Let's say the bank will give me $125,000 on a cashout refi. A few months later i decide to sell the house and then rather than paying capital gains on a $200k profit, i only pay it on $75k.

Thoughts?

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Originally posted by @Joe Splitrock:

Originally posted by @Jeremy Clarke:

@Joe Splitrock great points and i appreciate you taking the time to respond, as well as you Bill.

Yes 0%. Pretty cool, but the catch is you can't make any money pretty much (ha). I have been lucky enough to take most of the year to enjoy life and travel but now it's time to get back to work. I can't anticipate another time in the next 20 years where i will have a Capital Gains Tax status of 0% so it makes me wonder if i take advantage now.

Cash flow monthly is roughly $200 when i figure in rent minus principle, interest, taxes, insurance (as well as 15% average for operating costs). I don't use property management as it is self managed. So not a huge number but i'm in the black which is great.

I am a realtor, so my costs are only 3% to the sellers agent (or less if i can go off MLS or transaction broker).

Great point on the reinvestment. I don't have a reinvestment strategy today, but hope to by EOY. As you stated though now, the clock is ticking to sell before end of the year.

Agreed on gains tax laws getting worse in the future. Also on another topic, i highly doubt the homestead exemption is the same set of rules in 1 year.

All that being said, to be clear, you think that taking roughly $130k now would be better than gambling that in 20 years, i could take $700k? I am playing devils advocate a little bit here but only to try and get both sides. Obviously none of us have a crystal ball.

I look at it this way. Taxes are your largest expense (that doesn't add value). If I was to bet, I would assume 20 years in the future that tax laws would be less beneficial to investors. So given the opportunity to take $130K tax free today versus potential of $700K taxed in 20 years, I like the $130K option.

If you can invest that $130K into an investment that gives you 10% growth each year, compounding, you will have over $700K in 18 years. I use 10% because it is pretty easily attainable with rental properties. Find better deals and your numbers just go up from there.

To summarize, tax considerations are a major factor, but also how/where the money will be invested. As others mentioned, cash out refinance could be an option too. Although in your case it will probably leave the property cash flow negative, so I am not sure that is the best idea.

I would agree, thanks Joe.

0 Votes

All Forum Posts by: Jeremy Clarke

Jeremy Clarke has started 19 posts and replied 105 times.

Post: Need your creativity

Post: Need your creativity

Post: Need your creativity

Post: Can I use my current interest rate rate for another property?

Post: Can I use my current interest rate rate for another property?

Post: Can I use my current interest rate rate for another property?

Post: Can I use my current interest rate rate for another property?

Post: Can I use my current interest rate rate for another property?

Post: Cash Out refi - then sell?

Post: The Age Old Question...Sell or Hold?