All Forum Posts by: Rumen Mladenov

I have a HELOC on my primary residence and I use it for rental property acquisitions. Once the property is rehabbed and rented out, I do a cash out refi on it and pay off the HELOC. Rinse and repeat. The costs for a HELOC are much lower than the costs on a refi, I would only do the refi if you can lower your rate enough to justify it.

With that said, $900 rent on a property you buy for $125k and you need to rehab does not sound like a great deal... 

@Beau Watson, I am going to have to disagree. All of those expenses are valid and legitimate, and must be covered by your rental income if you bought right. Applicants are not your employer and I do not think they should be the ones paying for your time and expenses. Look at it from the other side for a moment. Imagine you're an applicant who knows rental demand is very high, so you take a couple of unpaid hours off from work to go tour a property, drive your car and burn gas, only to be rejected for the property. Would you expect the landlord to reimburse you for the missed wages, gas for your car, and so on? Especially when you cover all qualification requirements and still got rejected?

I do not charge any application fees. At the end of the day, screening costs are a small fraction of my rental portfolio expenses, and it would not make a big difference in my bottom line if I charged for them. I bet for a potential tenant that pays numerous application fees to be rejected from numerous places those fees have a much bigger impact. 

I have a friend who bought a condo with the same plan, and found out later that the condo association limits how many of the units can be rented, and there was a waiting list for such rental permits that was years long. Other condo associations prohibit renting out whatsoever, so it is definitely something to check out before you buy. 

I personally stay away from condos because I would like to be the one who decides when to repair and when to replace a roof for example, or HVAC unit. And I would much rather choose who does the work (and accept their bid) myself  rather than have a condo management company make that choice for me and send me the bill. Just saying. 

I just replaced my chimney cap and crown sealant myself in my primary residence this summer. As others already said, it's under $200 and took me less than a day. 

If you're worried about carbon monoxide, put a CO detector. To avoid creosote buildup, avoid using firewood that has not been seasoned at least 1 year. 

I would recommend PenFed. Great rates. 

+1 to not rush the appraisal. Bank will want its own appraisal done so paying for one yourself before applying is just a waste of money. 

As for HELOC vs cash out refi - that's a tough question. The benefit of a HELOC is that you only pay interest on what you draw from it, so until you find a property to purchase, you have 0 interest. Downside is that the rate is variable, and there is a chance that it may get frozen exactly when you need it most - when real estate prices crash and there's good deals to be had left and right (a la 2008-2010). Cash out refi is the opposite - you lock in great low interest rate for 15 or 30 years, and you get the money up front so no freeze to worry about, however you pay interest from day 1 and if your money is sitting in a checking or savings account earning 0.01%, even that low 2% interest on the mortgage is hard to swallow. So which one is better depends on what you expect the future to bring - credit freezes and real estate market crash (cash out refi is better), hyperinflation due to the extreme printing of money lately (cash out refi is better), or neither in the foreseeable future (HELOC is better).

For me it was really hard to find a lender for that first non-conforming loan. However once I found it, I developed a relationship with them and getting those loans financed became easy. Now my problem is lack of purchase opportunities... market is crazy hot in my neck of the woods.

@Lerone Blatch Do you plan to use own funds? Many of the potential deals we run across are not suitable for conventional mortgages, you would need to pay cash or use a lender who can close quickly (hard money lender). For example, you can't go to the sheriff sales hoping to get approved for a mortgage after you have the winning bid... Wholesalers also require fast closings for their deals. 

Have you decided what you want to focus on? You could be the guy who arranges the funds to buy the property and hires someone to rehab it, you could be the guy doing the rehab work, or the guy who finds the deal. You could be all 3, of course, but probably better to focus on one area first. 

I am not a flipper myself, I am a buy and hold investor, but hopefully others will chime in with more useful advice. 

Hey Avid. There's a bunch of us active investors in New Castle County, although many are taking the wait and see approach to the COVID situation. I'm always happy to talk real estate, so send me a message if you want to discuss anything specific. 

DELREIA is a great place to meet investors and learn about real estate. Check them out on Facebook, they used to have meetings every month but I think COVID put that on hold.