All Forum Posts by: Jeff Sacco

Jeff,

You are going to hit some road blocks with a heloc on an invesment non-owner occupied property. Majority of banks/lenders offer 60-65% LTV or none at all. Question - Would you be interested in doing a cash out refinance since it offers a 30 year with lower payment? With the cash out refinance you can take out 75% LTV unless you own it free and clear no mortgage you can go 80% LTV.

Eventually you'll want to replace COC with ROE, it's much more relevant. If you use COC and after 5 years it says 50 or 100% or infinite, does that matter if you're only getting 4% ROE?

you buy a $500k primary with 3.5% down ($17,500) and rent it out after a year for a couple hundred a month cashflow. 5-7 years later you're getting another 6oo/mon, $800/mo or $9.600/yr. 55% COC but it's appreciate to $800k and you have $330k in equity. So you're making about 3% on your equity. Unless you do a cash out refi then your COC is infinite.
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I guess, maybe COC matter year 1, maybe? But not really. 
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Again imagine a seller finance deal on a $500k home you can buy with $50k down and a no interest loan from the seller for $450k in the form of $2,000/mo for 200 months, plus $500 for taxes and insurance but it only rents for $2550. Now you have $600 yearly cashflow on a $50k, badly 1%.  But you wouldn’t take that deal? $50k off retail and a 16 year zero interest loan?  
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ps. People are making these kind of offers, so I assume someone is accepting them. My last listing we got an offer for $380k on a $370k listing with $20k down, $1,300/mo with a flat $1,000 principle $300 interest/mo for 30 years. (About a 1% interest rate.) luckily they added 2 more addendums to make it extra nice. They could sell the property without the loan being called due and the loan would be made to an LLC where the seller's only recourse would be to attempt to take the property back. We passed, but if everyone passed they wouldn't be doing it right?