All Forum Posts by: Leo Poon

Hi guys! I need help!! This is longwinded, but here it goes... I am trying to get my funds up to invest in our first real estate deal and am having a tough time making a decision on whether to do a Heloc or cash Refi. As it stands right now we'v been in our house for a little over 3 years. We bought at $210K (owe $187K) @ 3.625. Estimated property value in our primary residence is $275K. Our current payment is around $1350 including Taxes, PMI, ETC. I think our house would currently rent for approx $1500 or so and I am trying to keep my payment in that range in case we move to the new investment property and rent this one out.

I have a few things to consider here.

HELOC:

The HELOC has no fees for us unless we sell the house in 24 months( which is approx $800 if we do), other than that we'd have a 10 yr draw period and would only be paying interest on the amount we use (which could then be locked into a sub-loan with a fixed rate). I understand that the interest paid on this type of loan cannot be written off in Oregon. With current LTV, the credit union says we have been approved for approx $48K. We'd still be paying the $137/month in PMI (which kills me to think about the waste of $42K over the life of the loan) and only be paying interest payments unless we can afford to pay extra for principal. This means that we'd still be paying around $1500/month as I would like, but no payment on principal (for HELOC) and still paying PMI on current mortgage.

Cash Out REFI:

Our mortgage company just said they would try to wipe out the closing costs to compete with the HELOC. If I pulled $25K out with this REFi, I'd be coming out of pocket ($650) for the appraisal and our new payment would be approx $1500 (which is good becuase I think this house would rent for this in todays market and I wouldn't have to come out of pocket on monthly mortgage payment if occupied). We would then owe approx $215K after closing (that's with filling up our escrow acct for taxes,etc again). Our new rate would be 5.375 and would reset us to a 30 year mortgage. Our lender says that although we currently have a 3.625% rate and currently pay $137/month in PMI we actually have a 4.38% rate without even really knowing or thinking about it. So by going this route we'd have to pay approx $150 more each month on our mortgage, but we'd be cutting out the wasteful PMI and have $25K in the bank to put towards an investment. This interest is also a tax write off which would of course lower our taxable income for the year.

I feel like this is a lot to consider and I cannot figure out what would be best. We'd like to rent out our current house and either move into another SFR or possible a multifamily with FHA.

Any thoughts?

@Raquel Sayago I agree with everything @Matthew G. stated. I work with an HML in north Texas and we will lend 100% of purchase and rehab costs up to 75% of the ARV (meaning that if the ARV is $100k, we would be able to lend $75k and if your purchase and rehab price are $75k or less you will be 100% financed). Even with that, you will have money to put down. I have not met an HML that will roll origination fees, points, or purchase closing fees into the loan. You will also need money to make the monthly interest only payments. And the rehab is almost always out of pocket but you can make draws on the loan you have to pay yourself back once the work is complete. Even with a 100% loan, you will need to have roughly 10% of the amount borrowed in cash to close and make your payments.

If you have any other questions about HMLs, post them here an tag me in them. I would be happy to answer them for you.

Best way to buy a property with no money down is going to be using the subject to existing financing method where you take possession of the home from a desperate homeowner and just start making payments. They sign title over to you but the loan is in their name and the lien is still on the property. You need to find a title/escrow/law firm that will utilize line 203 and 503 on the HUD-1 document. Not all will.

Help! I lost my job over a year ago, went through my savings and in the process my credit started dropping drastically. I’m a hard worker and have all the time in the world. How do I qualify for a loan to fix and flip houses without savings or good credit? Thank you in advances for any positive feedback.

We are averaging 4% vacancy in the last year in Bridgeport with our portfolio.

Hi BP, 

I am on the hunt for my first apartment complex. I have been using the MLS so far for my investing.

I am thinking somewhere along the lines of 8-12 units for my first. I have several agents keeping a good eye out for me. I have sent letters to just about every apartment owner in the surrounding towns where I live in Massachusetts. I have received some calls however none have worked out so far. Does anyone else have any creative ways to target owners of apartment complexes to try and complete a deal? 

Look forward to the responses!

I didn't really plan this scenario, and some of you will fault me for a laissezfaire approach, but I started investing in SFRs in the year 2002 as a SIDE BUSINESS.  Lukily, I had other income so I've never neede to take a salary from my rental portfolio.  I invest in Oklahoma City, admittedly a low value market, but I now have 140 doors now, mostly Single Family Residences, with a few Duplexes, Triplexes and Fourplexes mixed in.  The debt on the properties are deep into their amortization schedules now, and it is becoming easier and easier to pay the banks.  With inflation, the rents have almost doubled since 2002, and I am paying the banks back with CHEAPER DOLLARS.  And the snowball is getting bigger. Whoohoo!  Not posting to brag, but to inspire.  What's in your wallet?