All Forum Posts by: Neil Henderson

Owner occupied (3.5% down), second home loan (10% down), partner with another investor to reach a combined 20-25%, talk to small community banks. 

Not a lot of options. Banks want investors to have skin in the game to lower their risk, especially given the state of the economy.

I have always done Delayed Finance, requires no seasoning period. Had one refinanced before I even had a tenant in place, but it's a strategy that you need to go into from the very beginning.

In the future, line up the lender BEFORE you buy the property. Tell them what you plan to do, where the funds for the purchase will be coming from, what you estimate the ARV will be, etc.

I cannot imagine any lender is going to appraise a property and then wait six months to do the refinance, seasoning period, or not. They are going to want a recent appraisal. 

I could spend time writing this all down for you but I think Neal Bawa's process is my favorite.

https://www.youtube.com/watch?v=nA2sL-Nx1RU

I know of three and I'll list them here in alphabetical order so as not to favor one over the other. If you want to know more, feel free to direct message me:  AJ Osborne from SelfStorageIncome, Scott Meyers from SelfStorageInsiders, and Michael Wagner from StorageRebellion. 

They each have a slightly different niche in the self-storage investing world. It really comes down to how much you're will to spend and the kind of investor you are.

@Chris Bluem Really, the best way to gauge occupancy is to just go to AirBnB and look at comparable properties in the same vicinity. Look at their calendars to see what kind of openings they have. It's not an exact measure, but it should give you an idea. 

I believe @Whitney Hutten invests in KC.

We started with a house hack doing a short term rental from an auxilary dwelling unit on the front of our primary residence. This, plus fortunate market appreciation, allowed us to use that equity to purchase a couple of BRRRR properties out of state. Yes, there are challenges and risks. The key is having a rock star contractor you can trust, a good property manager, and boots on the ground who know the area.

Probably. It really depends on the refi lender, and that's why I would recommend talking to a few potential lenders first. 

There's no reason a combination of funds from multiple sources couldn't be used to purchase a property like cash. You'll need to have those funds deposited into one bank account before making the purchase.

The real challenge is finding a deal that you can add enough value to properly execute the BRRRR. You're looking for a property you can acquire for 70-75% After Repair Value minus the costs of the rehab and holding costs. If you overpay, you're going to leave money in the deal. If you under estimate the rehab, you're going to leave money in the deal. If the after repair appraisal comes in low, you're going to leave money in the deal.

Be sure to factor in closing and holding costs, especially if you are not using Delayed Financing. The lender will require a seasoning period after you find a tenant, and that could be 6-12 months. 

Welcome Cameron, and congrats on the house hack. It is, in my humble opinion, the best way to get started in real estate investing. I wish more of my young cousins would see it's potential instead of complaining about not being able to get into the housing market and not wanting to have roommates. 

1.) Can we get a HELOC on our rental property AND our primary residence?

Very definitely on the primary residence, maybe on the rental. It depends on the bank.

2.) Can I go to a local Credit Union to get a HELOC for both or one of the properties? Or do I have to go to the bank that I have the mortgages with already to get the HELOC?

Definitely do not have to go to the bank who holds the mortgage. Our mortgage was held by Wells Fargo, we got a HELOC through America First Credit Union. Shop around.

3.) If I am able to get a HELOC from both properties, (I know you can only take anywhere from 80-90% out, so that would give me around $105,400 as a HELOC) and I have the difference of cash ($194,600 if I was basing it off of a $300K purchase price) from a private money lender, can I pay all cash on a property using three different payment types (2 HELOCs and the rest from the private lender) Or does it get complicated when you try to use more than one way? (Hopefully this last question makes sense)

80-90% sounds pretty aggressive to me. We were only able to tap 75% of our equity, and that was pre-COVID. Lending standards are tighter in general right now. 

If you are planning to do a BRRRR with the HELOC, keep in mind a few very important considerations:

1. Consider the HELOC funds short term debt. I would not recommend a strategy that left an outstanding balance on the HELOC for longer than 12-18 months.
2. If you plan to BRRRR, start talking to end lenders (refinance) now BEFORE you start looking at properties. Tell them exactly what you plan to do, where the funds will be coming from, and what they will require to complete the refinance. Cash-out refi's have tightened up in the last 3 months, we had our latest drop from 75% LTV to 70% LTV. Not the end of the world, but definitely had to leave more money in the deal.
3. Keep in mind, most cash out refi lenders are going to require you have 6 months cash reserves (to cover 6 months of PITI) sitting in an account somewhere.

Yes, definitely worth paying for a month of AirDNA for that area. Though, keep in mind, things are very much in flux right now, so I don't know that I would trust AirDNA's recent data.

If it's legal in your area (please confirm this before you go any further), you could very easily manage a short term rental on your own without a property manager. You'll just need to develop the systems for dealing with guest communication, cleaning/turnover, repairs/maintenance. All very possible to do with a little work, it's just a little bit of a learning curve.

The medium-term corporate rental market is a little harder to break into, and a property manager who specializes in this might be advantageous. Again, not impossible to do it on your own, just a learning curve and ramp up time.

A larger unit will typically bring in more revenue, depending on the competition in the market. Is it possible to rent the unit as both a split unit and a combined unit? We see that with a lot of savvy operators in seasonal markets. They rent only the larger combines unit during the high season, then split the units up into smaller units during the low season.