All Forum Posts by: Noble Willis

I have a property that has a primary mortgage with significant equity.  What options do I have to get the equity but keep the mortgage (which is a good rate currently).  Banks that I’ve looked at don’t typically issue non-owner occupied HELOCs.

Any ideas are welcome!

How did this project go?

With rates at the current lows, I'm looking into conventional refinancing to capture some savings (on my monthly bill but also long term interest).  I had a few questions that I'm hoping someone can answer.
1) Can you roll the closing costs into the financing of the loan and still have it be considered rate and term (no-cash out)?  (My understanding is yes)
2) Is it possible to get some cash out of the deal?
2a) What is the most that you can get? (500? 1000?)
2b) Any strategies to maximize the potential cash out?  (e.g. request extra to be put into prepaids/escrow ultimately becoming some sort of "refund" when the escrow is balanced.)

Thanks

@Steve Maye,

My understanding of taxes are capital gains are included in your AGI, which would then be used to get your taxable income.  But capital gains would be taxed at a different rate, e.g. that tax table.  So in your example of 65,000 (married joint filing), you could have up to 15,000 capital gains bringing you up to 80,000.  So you you tax tables would be based on 80k taxable.  So you’re looking at 0% on the 15k cap gains.

Hi @Steve Maye,

First and foremost, Congrats on retiring (or soon to be)!

(Disclaimer! I'm an investor - not a real estate, tax, or legal professional.)  

One option, could be to consider owner financing.  This could create limited income for the tax year, instead of 1 big chunk of capital gains from a sale in a single year.  For example, if you were to realize 100,000 in capital gains on sale, you would be taxed at 15% (so 15,000 in tax!).  However, if you owner finance over 5 years, you would claim 20,000 capital gains per year, which is taxed at 0%.   So you would have steady payments coming in over 5 years from the sale and save 15k.

BP is a great place to receive shared insight, but you definitely find/talk to a professional who can guide you on your ideas and thoughts for best position moving into your retirement.  

Regards,

Hi Joe
You'll need to weigh the risk versus reward.

I have a Quadplex in a rougher area, which has done well due to 3 good long-term residents.  But if my fourth unit was a single unit and I based experience on the 2 turn overs this last year in it -- then I'd be underwater.  Not just from missed rent, but damage/repairs, costs of eviction, etc.

After numbers that work for you, finding a good residents for each door you have is key to success.  As the others have noted, for a first investment it may not be the way to get your feet wet.

Best of luck

@Jenny Roman, @Adam D Rinehart
I was able to talk to a lender who does the student loan cash-out option and explained the process to me.  Yes, it's applicable to investment properties as well.  Basically, you qualify as cash-out, but don't add the LLPA adjuster for cash-out-- Essentially making it Rate/Term, even though you got "cash out" to pay off your student loan(s).
(May have been what @Harjeet Bhatti was hinting at in her post?)

In my instance, isn't going to be worth the closing costs versus just paying the small loan myself, even with a small drop in interest rate.  In the instance of a larger loan, possibly.  Numbers will always tell!

@Adam D Rinehart, thanks for the quick response.  Do you happen to know what section of the IRS Code it was mentioned?  (I'm not finding it, granted a quick search, which I'll keep looking into)

@Adam D Rinehart, Did this work for you?  I'm contemplating something similar.  How was the process? Was the lender from BP?