All Forum Posts by: Richard Pastor

@Jason Wray I am going the DSCR route. I didn't know about the 40 year term so I asked my lender and they do offer it. Thanks for the tip. looks like it would drop my payment $250 bucks. I am looking out of state right now to find more properties. In the Midwest I can put 20 percent down and cash flow so may do that.

@Frank Pyle Basically all of that. I don't want to over leverage myself. I have solid cash flow. I don't want to pull to much out because I don't have any deals lined up. I would like to scale but only if I gain more cash flow. You cant really do that here in Oregon. I don't want to let all that equity sit there either. So maximizing cash flow while pulling some equity out would be great but how much do I pull out? 

I had to do this. I purchased a 4 plex with had money and the place needed a complete rehab. I had 3 tenants. 2 on month to month and lived there less than a year and one on a 6 month lease that lived there for 6 years. Oregon being very tenant friendly I could not refuse to sign a new lease or kick out the tenant who had lived there for 6 years. In Oregon you can only terminate someone's residency after one year for 3 reasons. One of those reasons was a rehab where its unsafe for someone to live there while work was being completed. Also in Oregon you cant raise rent more than 10 percent. They were paying half of market rent so offering them to stay at higher rent was not an option. I ended up giving two a 30 day notice and one a 90 day. I also didn't collect any rent from them while they stayed. 

Ok I just wrapped up my first BRRRR. Here is a little of my backstory. My wife and I inherited her fathers house and started renting it out to her brother in 2020. We owed nothing on it. Fast forward to June 2024 and her brother says he is moving out. My wife and I know that the house needs a complete remodel and it would be the perfect time to do it. At the same time I came across a off market 4 plex my neighbor was selling. This also needed a complete remodel. We complete the remodel of the house in two months and get a renter in place at $2790 a month. We paid for the 50k remodel out of pocket. After rehab and renter in place we refi for 325k. The house appraised at 500k. The 4 plex was purchased with hard money and I was going to fund the rehab with my 136k heloc on my primary. After the refi on the house we paid the heloc off and paid down the hard money loan. fast forward to today and I am trying to refi the 4 plex. Each unit will rent out for $1150 ($4,600 fully occupied). We currently have two tenants in place and one moving in April 1st. We owe about 180k on the hard money loan and 9k left on my heloc. I would value the 4 plex at 650k. My question is how much do I pull out. If I refi at 220k that would pay everything off and put about 30k in my pocket. I would cash flow about $2,700 a month from all my properties. I could also refi at 330k put 130k in my pocket and cash flow 2k a month.. with a 100k extra I can do more deals but dont want to just scale. I love cash flow. Or I could refi at 70% and put 260k in my pocket but this would wipe out my cash flow. Actually would give me 1k but that is not factoring in cap ex and vacancy. Any advice would be greatly appreciated.

 Hi Dan

I know my bank does HELOCs on investment properties. I will also have about 450k in equity. I was quoted 11 percent for a investment property the last time I checked. As I stated before a hard money loan is about 12 percent with 2 points. I just dont see the point of going hard money when I can borrow from my HELOC.

Jason

Thank you for the reply. I would not use the HELOC as a mortgage. I would use the HELOC to purchase a depressed property and then rehab it. So I would only need the cash for less than a year. With hard money loans being around 2 points and 12% it would be cheaper to use a HELOC to pay cash for the property and would not need to pay the points. Then once the rehab is complete and rented I would refi into a DSCR loan where your DTI is not factored in. I could also use the HELOC for fix and flips as well. Then when I am not actively doing deals I would have more cash flow from my properties due to the zero balance on the HELOC.

Hi all

I have a strategy question for you all. I have purchased a 4 plex with hard money as well as used my HELOC from primary residence. I did a cash out refi on another investment property. The investment property is now in a LLC. I used that money to pay off the HELOC. I will use the rest to pay off about half of the hard money loan for the 4 plex as well as finish the rehab. After the rehab the ARV of the 4 Plex should be around 650k and I will owe the hard money lender about 160k. What I would like to do is get a HELOC on the 4 Plex then Refi into a DSCR loan. The DSCR loan will likely be in my LLC. Due to the low amount I will owe to the hard money lender I want to get a HELOC to find and fund other deals but when I am not actively doing deals I want the cash flow. This is why I dont want to refi the max amount. Is this possible or am I just dreaming?

Thank you for sharing!

what are the interest rates looking on a dcsr loan with 750-800 score?