All Forum Posts by: Page Weil

Jeff, you are right that we are doing a refinance. 

Is there any avenue to sending an email to the appraiser who will be visiting the property? Maybe through their agency?

I have a series of links to pre-rehab pictures, video and a scope, but I don't have a way to get it to them. I may be able to print out a single page with some QR codes pointing to the videos. I just don't know what might work since I may not be able to show up in person when the appraisal happens

Like many people here, I live in constant fear of an appraiser coming back with a crazy low number for any rental property refinance. I recently did about $55k of work on a property with a $50k purchase price so I am into the property for ~$105k. Our repairs included a new roof for a 2 car garage, new bathrooms, kitchen, drywall, flooring, electrical and more. The house was a DUMP before.

I want to make sure whoever comes to inspect the house takes into account what we did to make it a more livable space. I understand that there is a fine line to walk here since I want a higher value but appraisers try very hard to be objective. 

I have provided my loan officer with all pre and post rehab pictures, as well as our line-by-line scope of work and a signed contract with the rehab company for doing that amount of work. 

Does anyone here have any strategies for helping an appraiser see the value we have added?

There is a run down property near me in an excellent neighborhood. It was last sold in the 1980s and has holes in the roof and appears unmaintained.

A typical home in that neighborhood costs around $650k. I assume it will need 80-120k in rehab and updates. If the owner will accept an offer of 500k, then it is definitely worth it.

I'd like to approach the owner to buy it and then rehab it so I can either move in or sell it. 

The problem is that I don't have 620k in available cash or credit on hand. I have a HELOC with about 80k available that I could use as a down payment.

i have a good relationship with a local bank but I could use some advice on my approach. If possible, I'd like for a bank to finance the purchase and rehab cost. Any tips for approaching a bank with this and what I can expect from them?

Single family home, USA

Tenant has not missed a payment (though they have only been on the lease for 6 months).  I just got a letter in the mail from a law office saying that my tenant is declaring bankruptcy. I only know a little about bankruptcy law so I want to understand where I am protected/exposed:

• Is their lease null and void now?
• Is the tenant required to continue paying rent?
• Should I start preparing for eviction?

These renters have not missed a payment, so I would rather not evict.  What I'm worried about (and this is where my legal knowledge breaks down) is that by having tenants that declared bankruptcy:

• they are no longer required to pay under their lease,
• I have no legal recourse if they decide to stop paying, or
• my landlord rights are reduced and it will become much harder to evict or force payment if they stay

@Nicholas Covington thanks for the reply. I have no car payments (paid cash), no credit card debt (I pay them off in full every month) and no student loans (paid off before I got into real estate). I have no other debt besides mortgages/HELOC. I have been at my current job for 5 years and in this field for 10.

The reason I asked was because it seems like rental income isn't counted 1:1 in terms of coming up with DTI. If rental income is just another line item on the calculation then I think I can come up with the number.

The next related question is what overall DTI does a typical underwriter require for a loan on an investment property or does it even matter if the property is rented and I have a signed lease?

How do underwriters calculate DTI when I have several leased rental properties? This may seem like an obvious question, but my last experience is that there is more to it than [rent payments] - [PITI] - [1% repairs]

I have access to a lot of credit I can use for outright purchases of rentals but I only want to buy properties if I can refinance them immediately. I don't want to buy a property with a handshake agreement that a bank will give me a loan, I want to be able to calculate the DTI the bank cares about and see when I am near that target.

Income:

[Day Job]

[Schedule C side business]

[Rental Income 1]

[Rental Income 2]

[Rental Income 3]

Debts

[Primary Mortgage]

[Rental Mortgage 1]

[Rental Mortgage 2]

[Commercial Loan for Mort 3]

[Minimum HELOC payment]

How would an underwriter actually use these pieces to come up with a decision on whether they would loan to me?

@Brian Eastman thank you for the detailed reply.  I have a side business that nets 30-40k per year for 500 hours of work so I think I am approaching a threshhold where this makes sense.

I just sent you a message through LinkedIn.  I would love to connect and discuss this in more detail if you are interested.

@Brian Eastman I know this is an old thread but if you are still reading this I have a couple question.

While there is only a small reduction in year-to-year taxes, aren't there other benefits?

How are capital gains treated when you sell a property that is owned by a Solo 401k?

Also, how are annual expenses/rent payments treated?  Do they just go in and out of the 401k like a normal contribution?  Is there a limit on these payments since they are all associated with a single asset?

@Shaun Weekes thanks for the insight, this is helpful.  I assume you are referring to the Delayed Financing Exception from Fannie Mae's site?  

I bought the home using the HELOCs already, so the debt in those is being considered in my DTI. After talking to the loan officer, it sounds like there might be some reporting requirements related to when the money was drawn from the HELOCs (proof that the money was drawn and then wired to the Title company for the original purchase). But it didn't seem like this was a dealbreaker.

Also, what do you mean by overlays? From Googling it sounds like that is a generic term for "this lender has extra rules they follow".  Are there any common overlays you have dealt with?

I have about $200k in HELOCs and used them to make a cash offer on a property and then I can refinance into commercial or traditional mortgage after shopping around a bit.

I have run into a problem with underwriting a couple of times now. My loan officer hasn't told me the exact rule, but essentially they are asking whether I bought the house with cash or with credit. They need to make sure their refinance goes towards paying down the credit. Since the HELOCs are just part of my normal banking, there is not a way to guarantee that their refinance will go to the HELOC and not just to my checking account. I have had this conversation with a commerical and a traditional lender now and it could be a deal breaker for the refi.

I thought using HELOCs for financing would help me make deals easier, but this is being a headache. Anyone else have a similar experience in have strategies to use HELOCs to optimize their investment property purchases?