All Forum Posts by: Kevin Woodard

Reaching out to connect, Rich. 

 See ya there Brandon!

@Evan O'Brien thanks for the shoutout mate!

@Tyler Fisher I’d be more than happy to connect and find a solution for you. 

You do need to factor in origination, closing costs, and third party fees. So from that $50,000 you may lose 1%-3% of the loan amount to origination ($1,500-$4,500), there’s closing costs (.5%-1.25%), and another $400-$800 for the appraisal. 

Contrary to some comments, there are banks that do HELOCs on NOO properties.(Google: BiggerPockets NOO HELOC bank)

The challenge will be finding a bank that does them in this economic environment.  

This likely places you in getting a HELOC on a property that's in your name, the issue that it is still non-owner occupied may pose an issue. I would still recommend you ask local banks, worst case they say they won't do it. (Call local banks along with the ones in the statement above.)

Last part, what's driving transferring the deed over to an LLC?

To piggy back off of what @Jason Wray provided. Your $1 in renovation can equal more than $1 in after repair value, you need to complete strategic rehab and value add work. 

So long as you can maintain your total project cost (initial purchase, rehab cost, and closing costs) below a percentage of after repair value, the excess goes back to you. 

The percentage will depend on the loan you refinance with but anywhere from 70%-80% is typically what you can find. 

You could refinance out with a 2 year bridge with the option to extend to a third year. This will let you stabilize rents and could help with the sale. 

Alternatively, you can keep it on the books if it cash flows by refinancing into a long term loan. 

Hope this helps.

I would really understand the terms of the loan before dropping someone else's money on an investment. I am going to piggy back off of what Benjamin said and do your due diligence. I'd be more than happy to go over the terms of the loan to help you with understanding. 

Outside of understanding the terms, I am curious what the over strategy is: rental type, long term goal, market, etc. 

@Devon Harris 

There are a few things that come into play, I'll go through some of the big items below. 

1. Do the proceeds justify the refinance? Which really means how much equity is in the property? This is also a good question for your attorney with respect to asset protection and what you doing to distribute your net-worth across isolated assets.

2. Is the time right? If there is equity, but you can wait the storm (current rate environment) then maybe wait. This may also come into play with prepayment penalties. 

3. Do you need the proceeds? This goes hand-in-hand with timing, but if you need the proceeds for a follow on project or to pay off debt. It probably justifies the refinance. 

I'd be more than happy to talk more in depth with you.

The valuation from an appraisal should be a range that ideally comes in 5%-10% of what you were expecting. If they come in wildly out of range you should have your lender submit a reconsideration. Ideally they are working with the AMC to get the verbiage right and see what was wrong with the original comps. Appraisals are also subjective so understand where the appraiser is coming from.

If the reconsideration doesn’t prove fruitful a new appraisal is always an option. 

Unless you have a bad lender it’s really outside of their hands they should assist, but if they do everything for you then it’s not their doing. 

I have done both of these above and would be happy to chat more about what I submit up if your lender isn’t doing it.

I would to the maximum extent practicable do the most so you know you're maximizing the value of your property. Provide detailed SOW/Budget, comps from the MLS and why you picked them, and optimizing the rehab budget to keep cash in low.

Hope this helps!