All Forum Posts by: Justin Phillips

The Offset mortgage, as it's referred to overseas, is an incredible tool for those who qualify. My wife and I got one on our property, and I loved it so much that I left my job in Medical Sales to join a broker that specializes in them! 
The bottom line is that you're getting all the benefit of deposits/idle cash, not the bank. Positive cashflow creates a large snowball effect, because your interest cost and balance rapidly decrease every month in unison. You then retain access to your equity for the 30 year term, so you can re-use your line to buy additional properties! 
For those that qualify, it's not an interest rate sensitive loan, because the payoff timeline is so condensed. It becomes more of a function of interest cost, rather than interest rate. Along with that, even through the '08 meltdown, none of these loans were called or frozen here in the states. 
It's not for everyone, but it is for everyone who qualifies. I believe everyone should at least educate themselves on this loan type as an option. 

At the end of the day, it really depends on your goals and risk tolerance. My wife and I got a specialized 1st position heloc on our property. It allows us to aggressively pay down our principle with income and idle funds, while retaining full access to every dollar we deposit. We see it as the best of both worlds! We can put every non-investment dollar towards our mortgage debt, but without any fear, because we still have full access to those funds. 

My wife and I had this same dilemma with our property down in SoCal. We ended up ReFi'ing into a specialized 1st position Heloc, and we've loved it. It's allowed us to keep the property as a rental, while retaining access to equity. We've still enjoyed our cashflow, which is building equity that we'll write a check from for our next deal. We can also put our idle funds on our line, where they work tax free, 8x harder than any savings account we could get. I'd definitely recommend checking it out as an option! 

As far as the financing side, I'd definitely recommend a Heloc. You can set those on rental properties no problem. The nice thing about a heloc vs cash-out, is you're only paying for the money that you use. So you're not committing to 30 years of mortgage payments on day 1. Now is a great time to open a heloc, because the market/values are so high. 
My wife and I set-up a first position Heloc on our rental, and we love it. We're able to put idle funds to work, while we're waiting for the market to start offering more attractive deals. When a deal comes up, we'll simply write a check from our line and purchase in cash. 

For investors, the goal of a first position heloc is really never a balance of $0. Investor use it to Re-Lever, and finance deals themselves over the 30-year term. Each property purchased on the line pays off faster than the last with the added cashflow. On top of that, all of your idle funds and checking accounts work for you, rather than working for BoA or Wells. It's a great wealth building tool for all that qualify. 

I recently ReFi'd a client that was originally looking at the "Replace your mortgage" program. It's crazy that people charge (and people pay) to be taught about this loan style. 
A first position Heloc tied to a zero balance sweep checking account is an incredible tool. It just feels like doing your normal banking, but instead of BoA or Wells profiting off your idle funds, you do. All deposits are swept toward the remaining balance on your loan, lowering your monthly interest cost. That compounding/snowball effect allows your deposits to work harder and harder for you each month, to where your balance and interest cost are both dropping rapidly. So you're paying down your balance with all your income, but without any fear, because you still have access to all the money you deposit. 

I love it for investing because after the property is paid off, I can simply write a check and purchase my next property in cash. The best part, each new property pays off faster than the last with the added cashflow. You can build an entire portfolio with one loan, without the need to ReFi/cash out every few years. 
It's not for everyone, but it is for everyone who qualifies. 

The Temecula/Murrieta/Menifee area is blowing up like crazy. When we moved to Phoenix we were conflicted as to if we should sell our property in Murrieta or keep it as a rental. We ended up putting it on a 1st position heloc as the best of both worlds. We've gotten the great appreciation, and have access to the equity for AZ investments. Temecula Valley is a great family friendly area that I expect to keep growing. 

Hey @Jake Vayda The Life Changer Loan is a first position HELOC that goes up to 90% LTV, with no seasoning required. Value is based off appraisal. That being the case, it's popular for people who found a gem of a deal, and quick Renos. It's an incredible tool.

@Katie Panzica Haha, absolutely.

So asset depreciation is a means in which assets are counted as potential income. It's great way to improve DTI/Qualification for those that are heavily leveraged or retired/ramping down careers.

There are different forms and amounts allowed that vary by loan program. It’s somewhat specialized, so it may not be an option with a lot of loans.

For example though, our loan allows asset deprecation over 10 years.

That would look like:

$100k in Stocks / 120 months = $833.33 per month.

So $833.33 would be added to the income portion of your DTI equation.

Accessible funds in 401k might provide even more per month.

I use Venmo for my rents. Super easy, free,  and most people have it already. We hope it's never needed for our tenants, but they do have the option of paying with a credit card through Venmo too.