All Forum Posts by: Nick Barlow

I used my Va loan for my primary-which is it's intended purpose, as you're required to reside in the home. I've since refi'd out of the loan to get a lower APR (yay 2021) but I'm living in my forever home so my wife and I aren't moving the kids.
There are many posts how your primary won’t make a good rental-I think I’m in that boat, so not worth moving to find out.

@Richard Ruedas like others have said I've done this too. It works like any other cash out refi-lenders LTV terms and prevailing interest rate.

In my case it was a cash out refi to fix the foundation in the same house. The lender was happy to get me further in debt and improve the property.

In my experience, DSCR loans reset interest rates every 60 months, so while you could do it today, it's probably the worst time in the past 10-15 years to do so.

@Ethan Ray @scott trench mentions this in his book Set for Life, actually.

My wife and I haven’t altered deductibles like this, but we’ve also owned primary and rentals for 5/6 years like you have. For all our insurance claims we’ve had, they we’re all higher than $2000.

The foundation we repaired was a 5 figure number, and NOT an insurance claim.

It’s an interesting question-one I haven’t implemented. I personally would want the deductibles for at least 2 rentals available at the same time, so for me, the lower deductible makes sense emotionally.

@Brandon Elliott bought a house at ALL of the 4 duty stations I was at between 2009 and 2015.

I didn’t buy a single one.

I should have bought a home with VA loan, refi out of it, and use again at new duty station-would have had 4 rental properties that my housing allowance would have bought equity into just by living my normal life.

@Alex Martens I would have said yes in 2018 or 2019-since then, I’ve had to replace a roof and a foundation, and I’ve started looking at LOCs as more of a reserve than a funding source.

LOCs saved me for the roof, which was a bit unexpected.

My HELOC went from a 3ish % rate to 9.1% in the last 12 months. Payments tripled.

Today, for me, it would need to be such a slamming good deal that for me to use a LOC for funding, a more connected investor than myself would have already purchased it.

@Tim Boylan agree with @Nicolas L-be extremely careful with long distance rentals.

I have one, and candidly, got lucky I didn’t get robbed blind.

If you don’t have a trusted team on the ground watching it for you, save money for 18-24 months and pounce on deals that fall apart once the bridge loans come due.

@Andrew Thomas Vedder if I were in your shoes, I would buy one rental. And keep plenty of reserves, so you never stress Cashflow. You’ll get to see first hand the tax benefits. You didn’t mention a family, but $120K puts you on the higher end of the tax brackets from your W2.

I agree with everyone who said not to pay down primary. Whether it’s 5 months or 5 years-refinance your primary when interest rates go down.

I’m currently not paying a dime extra/month on primary. It’s a sub 3% 30 yr fixed mortgage, but I am practicing what I preach.

@Tejas Shah I had a business line of credit secured by a duplex from the same local bank that held the primary loan. So, it was effectively a HELOC in action, but it was called something different. Tapping equity in your rentals is possible.

I say “had”-because we paid off the balance in December last year, and it renews in May (annual credit line), so I’m not sure if the future will provide the same benefits as the past, in the new era of bank failures and drying liquidity.

Worse case scenario is to build equity and do a cash out refi after the fed eventually pivots-I offer no estimate on that timing.

@Marcos Falcao my last purchase was Jan 2020. Prices in my market have been too high since then for me to pull the trigger.

Take what the market gives you: 4% risk free returns and Covered Call etfs or REITs at 6 to 10%.

Note I am not a financial advisor and this is not financial advice-just actions I’m taking personally.

If you’re set on buying, you’d need enough equity to make Cashflow numbers work. RE is the long game-you can cash out refi in a year or so when rates are better, or you could hold out a few months longer with a war chest and go shopping for big assets when the commercial bridge debts all expire.

With all the bank failure, getting a loan might be harder today than it was earlier this year or late last year (I don’t know, since I’m not really in a position to buy anyway).

@Leon G. Standard disclaimer I’m not a Financial Advisor and this isn’t financial advice.

I'd buy REITs in your shoes. That's what I invest in my IRA.

From my experience, they behave in much the same way we expect rentals to perform on spreadsheets. Rents/Divs go up with inflation, and capital appreciation occurs at an unpredictable rate.

Yes, you’re giving up returns compared to direct RE ownership, but you’re gaining piece of mind.

You could try note investing too.

Good luck, and I understand your point. I've been doing REI for 5 years, and all of your points resonate with me.