All Forum Posts by: Justin Hanson

Im no expert on fiscal and private debt but from what I have learned and observed this year, As the US treasury auctions off more and more debt this and fewer buyers to absorb it, the coupon is being bid up consistently with almost every auction. More debt will likely get issued this year, and next. With this in mind one could assume that we have probably yet to see a peak in mortgage rates? What other factors would contribute to rates rising or falling?

Awesome response, thank you! How do you define over leveraged? Im considering taking out a HELOC to fund my first purchase. As long as the property cash flows and covers expenses with a little left over, and the property is in a good spot that appreciates would this HELOC route be a good choice?

As an avid learner of all things finance, economics, business, and investing, and someone looking to get into real estate at what may be a very crucial point in the markets, what are all the tail risks to be aware of? 

Given the current state of the business cycle with rates elevated, potential economic turmoil ahead, and a whole lot of uncertainty for the economy as a whole, Its easy to second guess entering the market right now. Rather than be doom and gloom and miss potentially a great opportunity Ide like this post to be a place for veteran investors who have been through cycles in the past to share some cautions and due diligence for me and any others who are looking to get started. Thanks!

 Fortunately I have my wifes full support to leverage our house as long as the numbers all make sense. I hear what you are saying and I am totally open to all options. I just want my foot in the door and to start this journey. I am also not afraid of risk, I see it as opportunity as long as it is taken carefully and calculated. We currently have about 100k in equity and I would like to use about half of that as funding for our first investment. 

One option we are looking at after some advice from above is the DSCR loan. I have found a couple properties that may be good candidates for this option and even with current rates that I was quoted from my lender, would cash flow. Im not banking on rates coming down soon but if and when they do that will only help. However, when I factor in my monthly HELOC payments of about 500$ a month of IO it puts us in a negative cash flow of around 200$ With my current job I can support that amount and have the HELOC paid off in 3 years which brings us to a positive cash flow. Maybe by then, rates will have come down enough we can refi and be sitting in a good place with solid monthly cashflow.

The other option I am looking at, is as you suggested finding a good rehab deal and get Hard money to finance the purchase. I will have to shop around for other lenders because the one I spoke with wanted 20% down AND only covered the purchase leaving us on the hook for rehab funding. That brings me back to leveraging my equity to pay for the rehab. The risk I see with this is if we see a further decline in new listing prices and rates have still not come down, we will be holding a big bag that is burning a hole in our pockets quickly and no cash flow to cover any expenses. I know this is all a big IF but I like to look at tail risk and be prepared for a worst-case scenario l especially in our current environment.

thank you very much! I will be looking into the DSCR loan, that sounds like a good option for finding a rental.

I currently have a house under a mortgage and am having a very difficult time finding a way to finance an investment property. There is no chance we can qualify for conventional in our area as anything over 200k will put us over a .5 debt to income ratio. And here in Oregon most locations start out at 250k for a rehab project and 300k for a low end turn key. 

We have found one private lender who maybe would work for a rehab flip project but charging 1% interst only per month and only financing the house means we have to get creative for financing the rehab. I currently have some equity in our home I could tap into but was planning on using that to cover the required 20% down payment for this lender and that would leave only about half of our equity to work with on financing the rehab. 

Hoping to get some insight on other options I can look into other than waiting another year or 2 to save some money for a bigger down payment for conventional lending. 

Im looking at a prime property location with views of the ocean in the PNW. The lot is in a great location with great views, and can have a HiLine home built on it for around 250k the neighboring homes are all valued at 550k-600k + what is the catch that I am missing? What are the hidden costs associated with this route? The cost to build is 250k and I believe covers permits but not 100% sure. It does not cover hooking up utilities but they are less than 100ft from where the home will be built. 

I am wondering if you tally up all costs that come with purchasing a home (turn key rental for this example) such as title and escrow, closing costs, property taxes, etc. What is the average total cost as a percentage of the homes sale value? My wife and I are Looking to buy our first investment property and want to get an idea of how much money we will need to get started. We plan on financing the home with conventional financing, 15% down. We live and are looking in Oregon