All Forum Posts by: Josh Young

@Christian White

Talk to a lender, they will be able to help you create a plan, but this is my take on it.

If you did a cash out refinance at 75% LTV, is $225k, so you get a check for $50k because of closing costs, but your rate now is probably low and you'd lose that. I'd keep your existing low rate and do a HELOC, the rate will be higher than the refi rate, but I suspect the blended rate will be lower if you factor in keeping the original low interest mortgage in place and LTV should go higher on the HELOC, 80% you will get $70k because no closing costs. And the HELOC will be interest only payments during the draw period, use that as the down payment on the new property and then in a few years if rates go down and/or values go up look at doing cash out refinances on both properties.

Like I said though you need to talk to a lender, they have guidelines they have to follow and they will really help you create a plan.

@Jason Rogers

Most lenders sell their loans to fannie and freddie, so they simply follow the guidelines that are provided, it looks like it must be at least double wide and you must also own the land. https://selling-guide.fanniema...

If you don't qualify based on these guidelines you might try a local credit union, they might entertain the idea. I hope this helps.

@Michael Nerby

You need to calculate the return on equity. (Cash Flow + Principle Pay down + Appreciation) / Equity.  And then what would you do with that equity if you sold and what will you do with it if you cash out refinance.  Based on those numbers provided you are at a 4.9% Cap Rate, that seems kinda low, 6% Cap Rate would make it worth $1M.  It's not a great time to sell right now (prices are still below peak), rates aren't great either, but if you hold you can refinance at a lower rate in a few years and lower rates should bring lower cap rates. I almost always lean towards cash out refinance and hold vs sell, it's easier to grow your portfolio by leveraging than it is by selling.

@Account Closed

That is a great question. The biggest question to ask yourself is: what will you do with the money and what kind of a return can you get vs leaving it in the property. The deferred maintenance makes it more complicated for sure.  I wouldn’t worry about property values going down if we have a recession, they have gone up in 7 out of the last 8 recessions because interest rates typically decrease in a recession. I’m in a similar position as you with one of my properties, but I have decided to keep it long term since I did a cash out refi 18 months ago, I figured it’s a 3 year break even on tax savings vs appreciation, but I like my leverage on it and I don’t have the deferred maintenance that it sounds like you have.

@Nick Howard

Remember Rich Dad Poor Dad. The cash flowing duplex is an Asset. The primary residence is a liability. Do not sell an asset to buy a liability. You also kinda answered your own question in your numbers, keeping the duplex makes you more money, and don’t forget principle pay down, that will be a few hundred dollars a month too. And if you change your mind in a few years you can always sell the duplex at that point.

 @Anderson Bigate Nogueira

The HELOC will allow you to keep your current loan and your current property and you will only pay interest on the money that you borrow not the full amount like with a cash out refi, and it will be interest only during the draw period. When rates go down in a few years you will be able to do a cash out refi at that point and pay off the HELOC. Selling sounds more simple, but if you can rent it out and keep that low interest mortgage I'd try to figure out a way to leverage it instead of selling. If you change your mind later you can always sell then.

@Gloria De la Fuente

Go for it! But don't do a month to month lease, go for the 12 month lease. Get the house clean, take great photos, write a detailed description of the property and lease terms for the listing, price comparable properties on Zillow, pick the median price, not the max, if you price it too high you will get unqualified applicants, then list it on Zillow Rental Manager. Reply to every inquiry, but make people apply through Zillow, so you can view their Credit Report, Background Check, and Income. The key is to attract a great tenant that is over qualified, I like 700+ credit score, clear background check and income 4x rent. I use Zillow for payments too, it's easy and free. Good luck!

Your new purchase will have a mortgage payment that is much higher than market rent, but in a couple years you will be able to refinance and rents will continue to increase over time, so you will be able to do it again at that point, just make sure you have a least 6+ months of reserves.

Here is a post I did about how I kept my house as a rental, then did it again. https://www.biggerpockets.com/...

@Curtis Roth

If you can get someone to partner with you (co-sign the loan), because you will most likely need help qualifying for a mortgage, but it will be owner occupied if you live in it, so low down payment and lower interest rate than investment properties.  You can buy a 4 bedroom house (or less and create more bedrooms) semi near your college and rent out the rooms to your friends, you could do really well.  If not, no big deal, keep saving and when you graduate college you will have good w-2 income and will be able to buy a house yourself and rent out the rooms, then buy another the year after and keep the previous house as a rental.  Read "Rich Dad Poor Dad" and "The Millionaire Real Estate Investor" and talk to a lender, so you start to learn the rules of qualifying for a mortgage, just walk into your local bank and ask to talk to a mortgage lender, they will be happy to talk to you and this will really help you create a plan.

@Soniel Estime

I think this is why people start small and do a few turn key SFH and build their way up to more units and more rehab, but good for you for taking it head on with a full gut rehab duplex and then leveling up to the quad. Man when I bought my 1st house I was so nervous, 2nd house too, then I started seeing results, started learning more and started to get more confident and comfortable. It's good to be a little nervous, that means you are learning and growing, and it keeps you in check, so you don't get out over your skis, it's actually good to listen to your body, I'm not saying don't take action, but I'm saying maybe run a stress test on your liquidity to make sure you can weather any storm, I have founding that adding cash to my reserves always helps me sleep better at night.

@Ryan Leake

If you look at 4 bedrooms your numbers will get a lot better, when you search on the mls filter by bedrooms plus instead of bedrooms, that way you find properties that an agent didn't list as a 4 bedroom because it's a 3 bedroom plus an office/den, but you can usually still rent it out as a 4 bedroom.