All Forum Posts by: John Cardinale

Quote from @Eric Mcginn:

I have a duplex in Maine that I have a ton of equity in. It also has a mobile on the property, all three units are long term rentals. 
I want to use that equity to get a loan to pay for a well, septic, and mobile home at a property I bought in Joshua Tree, San Bernardino County California. 
I've never done a HELOC before, is that what I should be looking at for this project?

Yep I like the idea of a HELOC also. Further, if you have enough equity there, you could use the HELOC funds, as a down payment for new loans to complete your California projects, and then find a few more projects to do, all using the HELOC as down payment money instead of thinking of it as the main funding for the project and deploying 100 percent of the HELOC in one spot. 

I've used a HELOC for heavy renovations before without renovation loan. One of the negatives with this strategy is there isn't a third party inspector involved which there would be if I had used a renovation loan. With only a HELOC you would be the one deciding if your contractor has completed enough work for the draws requested. From my personal experience, this was challenging and I much rather not carry this burden.

I think HELOC's are great options to have. Flexible loans are nice because you can borrow the money for a short period and then return it. For example, borrowing $150,000 for 4 months on your 9% simple interest HELOC would cost you $4500 in interest. That sounds a lot cheaper to me then locking in a cash out for X years at a point lower where you're paying interest even when you don't need to deploy your capital. The savings also assumes you finish timely and put the money back after completing BRRRR.

Equity is earned by: making a great purchase by buying under valued property, forcing property appreciation through rehabbing, paying down the debt over time, and having market values move in your favor or stay put. Using your existing equity to scale into more rentals can be a way to do it quicker. Now just happens to be a more difficult time  to borrow and so more and more deals that would have been actionable when interest rates were 3-4 percent are now more expensive to get into. In my market, real estate values seem to be adjusting to these new realties with longer days on the market, more price decreases, lower prices per square foot. 

So if you can use your equity to find your next deal that happens to make a positive cash flow, maybe it doesn’t all the way cover you 2nd loan from accessing your equity, you can then decide if it’s worth doing. Are you better off owning that property than not ? Will it appreciate in a year or 2? If it’s a break even, should you flip it instead of hold? can you negotiate harder to get a better return to compensate for higher rates? 

I hope this helps! 

HELOC may be your only other option.

Quote from @Jamie Hamilton:

I have a kind've wacky idea about using RV's to supplement cash flow. Its legal from what all I can tell in Dallas TX, it would just be a matter of parcelling up the land, buying RV's, and tying them into the plumbing and electrical of the house. I'm sure it'll be easier said that done, but still.

I figure in a situation like that, it would be best to market the dwellings as all bills paid. I imagine it would be hard to find a property manager that would stomach that, and I really would prefer using one.
I'd also look into doing ADU's on the land to increase flow, but my understanding is that is illegal here for some reason.

I really wish we could search these.
I am interested in any thoughts you have on this.

I tried something similar but with str’s and the pro’s are exactly that it’s a quicker way to get up and running. For me the negative of rv’s is the maintenance that comes with owning. They aren’t as resilient as a house would be. they don’t seal the same way so insects are often an issue. The parts required for fixes are usually specialized and can be more expensive. That said there are some folks I’m sure that can make this model work. Also I’m sure the model of rent the RV space instead of the actual RV would address many of my concerns. If doing for str, obviously you’d have to own the rv’s. Our guests often showed up inexperienced in staying in campers and had expectations that didn’t match the campers’ realities.

rambling post here, and just food for
thought. 

Quote from @Valerie S.:

Hi everyone, I'm new to real estate investing. I'm looking in to deals that offer seller financing and curious what your top questions would be for the seller when making the deal?

I would focus on what was keeping me (if anything) from getting traditional financing to finance the purchase and start there. Maybe it’s down payment help or a lower interest rate. Also, what would make it a good deal for you and for the seller? 

I'm not a veteran but ran across a listing that stated "Assumable VA loan". Just to clarify, can anyone assume a VA loan just as they would do any other sub-to deal?

This is a new construction BRRRR. I haven't done one of these yet although I've done several new construction projects that I sold off. If should work the exact same way as a regular BRRRR in my opinion, insurance should be cheaper and easier since everything is new. If the lot was purchased under market value then even better, you may get construction financing without having to pay a down payment. If there's less equity in the purchase, depending on the lender, they may want you to put something down, even with the lot free and clear.

Quote from @Lyle M Smith:

If anyone was curious of the outcome…

The owner missed our appointment for the second day in a row. Both times he lied about being on the way cause then he admittedly said he could leave his house cause he couldn’t find the keys. This time he at least gave me permission to go in if I could get access.

The doors were jammed shut but just from friction so I was able to push them open. The 1 bed room apartment was completely trashed and the layout was pretty kooky. The ceilings were prob only 7 feet and there was extensive water damage. The main 3 bedroom part of the house wasn’t too messy but it probably hadn’t seen and maintenance or updates since the 60’s. Needless to say the property was a full gut and then some.

I still liked it but I started to lose hope after calling him to share my thoughts. He can’t get my name right, he thinks it only needs 5 grand to start renting it, he’s 68 and was a career land(slum?)lord. He wants 239,000 but it prob needs $150-200k and he claims he’s not taking much less than his asking. I slowly worked up to the idea of working out financing between us but he batted it down quickly. I plan to offer him $100k and expect an offended denial but at least he’ll have my offer if he reconsiders.

…on to the next.

Don’t be discouraged! This can be a common scenario for off market properties as they are for sale by owner and in their current condition for a reason, that being the owners often think their real estate is much more valuable than it really is. If he approached a realtor, with an over-priced listing proposition I’m pretty sure the real estate agent wouldn’t waste their time listing and showing it. This owner doesn’t seem like he has the right motivation you want to see in a seller. He may be motivated by price only and thus doesn’t need to sell. 

just clarifying,,, are you asking if you can do a cash-out refinance, FHA loan?