All Forum Posts by: Jj Horst

@Tanner Marsey I own 2 duplexes in Austin, TX and realize I'll never cash flow enough but have a decent amount of equity. I'm leaning towards refinancing out the equity and purchasing a couple SFH in the local area (Waco TX) that can rent for 1% home cost. Seems like that would work a lot better!

From my limited understanding HELOCs are typically whatever the current mortgage interest rates are plus 1 point. 

6.125% doesn't seem too out of line. What is the interest rate on the home currently? 

Great info here. I just asked a similar question and glad to see everyone's take.
@Rhonda Blue - Did you guys buy the East TN properties outright or do they have mortgages on them?
Congrats!

My longterm goal is to get to $5-$6k in rent cashflow per month (not counting cap ex etc). I work a full time job and so does my wife so we're working on real estate on the side and aren't particularly wealthy so we're funding through frugality.

Here's the situation.

• We live in ATX where buying property is generally expensive
• Rents are relatively low compared to Home Values and the 1% rule never ever comes close here
• We currently own 2 duplexes. 
• One Duplex has both sides rented with about $120k in equity from mostly appreciation
• We are house hacking the other duplexed financed with FHA loan (deadbeat tenants removed from side B and rehab under way). I expect to have about $170k equity after the rehab

The Austin market has appreciated significantly in the last 5 years but rents haven't really increased. I'm sitting here trying to figure out how I can earn $5k a month on cashflow since it will take forever to pay down these properties and I won't be able to snowball very well with rent. 

I realized what might be a better way.

• Finish rehab.
• Cash out refinance both homes the max they will give me
• Use my newly released FHA to buy a 3rd duplex to house hack with a low down payment.
• Use extra funds (lets say $200k in this example) to purchase 2 $100k homes in local, less expensive markets like Waco, Temple, where we can achieve a 1% rule rent.
• $2k earned in rent
• Continue to pay down the ATX duplexes, hopefully continue to earn appreciation on their large home values and simply refinance every time we have $120k+ in equity and use to buy $100k single family home in full in a better market. Add $1k from the new property so this makes $3k/month
• Continue infinitely.

Of course crazy appreciation doesn't last forever but is there something else I'm missing? Seems like this strategy would help me reach my goal a lot faster than sticking to house hacking and then sitting around with unrealized equity but no cash flow.

Thanks for your thoughts! Every time I post someone really blows my mind with an idea I haven't thought of.

Thanks for the confirmation Alexander. Man I guess I just don't know why no one told me about this before. Seems like what everyone would want to be doing all the time. :)

Yeah the numbers definitely make sense, so much so it made me question myself haha. 

Hey all. I just got through evicting my tenant (stopped paying and wrecked the place. pretty nasty) in an owner occupied duplex and am taking out a HELOC to help pay for the rehab on the tenant side. I've done a lot of work on my side so I should have a decent amount of equity.

I can safely afford to pay off the HELOC over time, but I was wondering, if I force a bunch of appreciation with the rehab, is there anything holding me back from then trying to cash out refinancing the house to

A) pay back the HELOC (and save myself some interest)

B) Hopefully have a bit of cash left for myself so I can start saving for the next duplex down payment.

Seems too good to be true so I wondered if there is some rule barring it.

(Currently have FHA mortgage on the home)

Thanks so much for everyone's help here!

 Ha nice one. Hopefully she did. We actually thought we were the first to offer but apparently we were beat... We thought we won the lottery when the sellers came back, but then had the obvious...wait a minute...what happened to the other buyer? By then the seller had raised their minimum asking price. We decided to go in lower with our original offer and they accepted. We suspected it was because the tenants, and were later told by the sellers broker, yes don't freak out like the last guy on the tenants, it's not that bad and you can get them out....We'll here I am so we'll see if I can or not!

Yes luckily I wasn't enough of a green horn to give them the money up front. The thing I keep telling myself is that this was all part of the plan.  A flipper put in an offer on this house before us but then backed out after seeing how entrenched these deadbeat tenants were because he knew he wouldn't be able to get it flipped quickly with them there. The sellers then turned to us and we picked up a pretty good deal. Getting these people removed was always built in to the cost, it just so happens to be manifesting now. 

Lots of good thoughts. I live in Texas, and although this eviction process seems ridiculous to me, it's not so bad compared to other states. Having an eviction under my belt will probably lead me to not try and offer cash for keys in the future. ESPECIALLY since I did a cash for keys deal this time and he still backed out and didn't move, thus pushing my eviction another 2 weeks into the future. Might as well start the eviction process sooner and not train tenants to try and extort money.

Good thoughts. It's true it doesn't make sense but works. It's just too bad because if EVERYONE just went through with the eviction process we would all make more money in the long run by weeding out bad tenants for each other. 

I suppose it is what it is!