All Forum Posts by: Joshua Manning

Hey BP family,

I wanted to get yall's take on something. So next year I will be graduating from college with Bachelors degree in Finance. My plan after graduation is to start real estate investing as soon as possible. I plan on getting my real estate agent license now while in college so that I'll already have a job after graduating.

But here is the dilemma, my parents want me to go to grad school for my MBA after graduation. At this point I am very tired of school. I've questioned my decision to go to college since technically I don't need a degree to be a real estate gent or real estate investor at that, and now they want me to do 1 or 2 extra years of school for an MBA that I also don't need. I am just really ready to get started investing full time as soon as possible.

It doesn't make any sense to me for me to go an extra $10,000 in student debt to get an MBA that ultimately will not have any other purpose for me than being a back up plan.

So I guess my question is has anyone on here ever benefited from having an MBA as a part of their real estate investing career. And if so are the benefits worth the cost of the MBA?

@Tyler Goulden I have been doing some extensive research into this strategy myself. I want to attempt to do this but from what I've heard it has never been done successfully lol. In my own research I have found that you can refinance from one FHA loan t another and even better they will give you a 85% LTV rate on the cash out refinance, however there is a catch. You will have to live in the property for at least a year, and you have to have sufficient equity into the property as well. I have also seen where it has been said that FHA loans can not be refinance with a cash out if the property is an investment property. However I'm not sure if the bank will still classify the property as an investment property if you are house hacking it, and using it as your primary residence. I think a loan officer would be the best one to consult on that. I also think an FHA 203k loan brings its own special set of problems with it, but honestly I could be totally wrong on that part. But in any case if you plan to refinance with a FHA loan, you will need a sufficient amount of equity in the property before doing so. Because of that I would suggest putting a down payment down that is larger than the 3.5% required.

Right now I've begun looking into conventional loans to do a cash out refinanced with. They have a shorter seasoning period, but also a lower LTV value as well, but their guidelines for a cash out refinance are less strict and cheaper too.

In any case @Gary J. is right though, it is definitely possible, but in order to pull it off it seems you need to have a very careful and precise plan. And there seems to be little room for error as well.

My question now is...

1. Can you purchase a house with FHA 203k loan and cash out refinance with a Conventional loan?

And if so what guidelines would apply to such a strategy?

2. Can you convince the bank to not count a 4 Plex as an investment property if you are living in one of the units as your primary residence?

It sounds like a doable idea. In fact now I'm wondering why no one else has ever suggested something like this lol

Most of those things you can learn by talking with a loan officer. I think talking with one at a local bank about future refinancing opportunities before purchasing your home might help you out.

As for closing costs I know there are closing costs calculators that you can use online. I don't know how reliable they are though

@Merritt Whitman I've recently been doing my own research to Refinancing and LTV rates the highest I've ever found is a Maximum LTV Rate of 85% on a FHA Cash Out refinancing. But they have strict guidelines in order to qualify and you have to have lived in the property for a ovr a year in order for them to refinance on the appraisal value.

Okay so I've done a little more research into the refinancing portion of this deal. It seems that if I do choose to purchase with a FHA loan, then in order to do a cash out refinancing I would have to have lived in the property for a year. The downside is that this is a much longer seasoning period than I would've liked and gives tenants way too much time to mess up the property. But the upside is that if I were to do that then I could have a higher LTV Rate up to 85%, However this would only work with a high equity built into the property as @John Leavelle stated. The alternative would be to refinance into a conventional loan, which would have a lower seasoning period but also a lower maximum LTV rate as well.

What are your thoughts on these solutions. With the FHA I could live in the property for a year and that would give me a chance to build up equity into the property from holding it, as well as rehabbing it. I guess would have to be extra careful when screening tenants for that first year to make sure they don't break anything. Or I could try refinancing into a conventional loan

@Bill Richard Thank you for your advice you don't know how encouraging that is for me to hear. If you don't mind me asking who would you leave in charge of finding more properties for you to buy and coordinating the efforts of your team while your gone? I would assume it would be the real estate agent, and if that is the case would you formally hire them as member of your business, or is it more like your just partnering with them and the brokerage?

@Peter Vekselman Thanks for the encouragement and advice. I'm curious to know what your mean by ramp up time? Is that the time it takes for you to find and finish a deal, or is it the time it takes you to get used to the market?

@David Faulkner that is an interesting idea, and I think I would rather travel to a fixed circuit of places rather than a try to find a more obscure way to travel ad work. I'm really hoping BP will come through for me though in some ways, who knows I may be able to partner with an investor in another area for a deal or two to just try and get used to the market before striking out on my own. And the RV also really appeals to me lol.

@Kenny Oliver That's awesome man, I wish you the best of luck. I don't know if you would be interested in ding this but you could start an investor diary about your experience as well. I for one would love to see something like that.

@David Zheng Thanks for the encouragement, I'll definitely have to do a lot of research to find a loan that fits to this deal.

@Dustin Ruhl Thanks for the encouragement! I really want to find a way to make this deal possible, and I don't wanna mess this up.

@John Leavelle When you said that I would need 25% of equity built into the property was that 25% of the original purchase price of the property or 25% of the ARV of the property.

@Rolanda Eldridge Thanks for the encouragement!!

@John Leavelle Thanks for the advice. I really needed to hear that and am glad for you sharing your experience with me. I really think this is something I can pull of so I'm gonna Keep doing Research on it, and try to create a full fledged plan like you said.