All Forum Posts by: James Gates

Thanks Lloyd!

Hey @Tyler Hungerford, what time is the meetup?

Credit score did not take a big hit, and anything over 740+ gets the same interest rate from the bank. Since the HELOC only requires a payment of $100 a month, DTI wasn't really affected.

We paid cash at the beginning, part of my HELOC and part of my partner's cash.

Hey Nathan, the lender I used gave me 1.99% for the first year, 90% LTV, $800 closing costs. PM me if you want the lender!

Hey Stefan! What you are describing (HELOC --> BRRRR) is exactly what my partner and I are doing in the Huntsville market. Please feel free to reach out if you have any specific questions on the process, but I can tell you that generally, I have not run into any problems with using a HELOC and then 6 months later refinancing the property on a conventional loan. My HELOC payments on a 50K balance are only $100 a month, and that is what the bank takes into account when they run your debt-to-income ratio. For us it has been a fantastic strategy to jump-start our investing journey, we went from 0 -> 6 units starting with basically no money other than the HELOC. My HELOC is from a local bank out here in Cali but if you need a few recommendations on refinancing lenders hit me up with a direct message.

If you want to take a look at an in-dept description of what we are doing here is the link.

 https://www.biggerpockets.com/forums/223/topics/685820-first-brrr-complete-details-pictures

Thanks for the mention Caleb!

-James

 Hey Richie! I am a Real Estate Agent in the Inland Empire, and you have nothing to worry about with regards to Natural Hazard Disclosures (NHD's), or really any other type of seller/property disclosure.

Here is a timeline of my latest NHD report.

1) I am representing the seller, and I listed her home on the MLS at 10:00am in the morning.

2 Went to myNHD.com, typed in the address, ordered an NHD report in less than a minute.

3) Three hours later I had it emailed to my account, and I sent the report out for signatures. That is it. And even better, they take payment through the escrow account at closing, so nobody even has to pay for the report ($60) upfront!

Let me know if you have any other questions from your real estate class!

-James

Hey @Melissa Freeland! I am over in Redlands not too far from you. We have our monthly Real Estate Investing meetup coming up in a couple of weeks if you are interested with discussing this topic w/ local investors.

With regards to the topic of BRRRR in SoCal, it doesn't usually make sense. California is more a "flipping" market than a "BRRRR" market, due to the price/rent ratio. Because rents do not keep up proportionally with the value of the homes here, it doensn't make sense to keep them as a rental post-refinance, as you will likely be cash flow negative.

Hope everyone is planning on having an awesome July!

-James

 Hey @James! Welcome to BP.

I love the goal of House Hacking as a starting point. My wife and I got started in Real Estate a few years ago doing that with our primary residence in Redlands. Can't say enough about the valuable experiences it teaches you in being a landlord, let alone the financial benefits!

With that credit score you will be able to qualify for the best type of loans. If you need recomendations for lenders in the Inland Empire send me a PM I can help you in that regard. 

With your primary residence, I would suggest first thinking about where you want to live for the next ~7 years. If you are open to anywhere, then house hacking somewhere in the IE will make a lot more sense than LA. However if you know that you just really want to live closer to LA then you can still get great benefits from a house hack, even if it doesnt fully cover the mortgage.

Happy to see you taking the first steps towards financial independence, if you ever have any questions feel free to reach out!

-James

Hey James!

I see this question come up a lot when I am working with buyers in the Inland Empire, let me try to help you understand the FHA process.

FHA is a type of loan-product, not a type of "home." It is a government subsidized product that allows a qualified applicant to put as low as a 3.5% downpayment on their home, which of course is very popular in the expensive state of California.

In order to find out if a home qualifies for an FHA it is best to ask the real estate agent you are working with. They have access to the MLS (Multiple Listing Service). Think of it as the Zillow for real estate agents, except it has way more information on it such as what type of loans the seller will accept on the purchase of the home. In a hot market some seller's wont even allow an FHA loan to be submitted on a home, as FHA loans historically (although this is becoming less and less of a case) take 10-15 days longer to close, come with additional paperwork and hassles, and are seen as less desirable than a conventional loan (which requires 5% down minimum, 20%+ down optimal).

Some types of homes will not even qualify for an FHA loan even if the seller wanted them to, they may be in such disrepair that they will not pass an FHA inspection. Some Condo/Townhome communities limit the amount of FHA loans that can be used through the association.

If you are thinking of purchasing a property using an FHA loan, my best advice to you would be to get pre-qualified through a well-vetted lender who specializes in FHA loans, and get with a real estate agent who has been through the process and knows exactly what you are looking for.

If you have additional questions please feel free to shoot me a PM!

-James