All Forum Posts by: Sam T.

Join a country club if you can comfortably afford it. Hang out/drink at fancy whiskey or wine bars. Go to/join your local REIA.

Thank you very much guys. I'll go ahead with the HELOC over a fixed 2nd mortgage then. The rate will be maybe 1/2 a point higher, but if I only have a balance open for say 6-9 months out of the year, that'll be a lot cheaper than a fixed 2nd that I have a consistent payment on each month. I really appreciate the help.

I'm a little torn between whether to use the equity I've built up in my portfolio to get a large HELOC, or take out fixed-rate 2nd mortgages on my current properties. The goal is to use the funds to make "cash" offers for new purchases and renovate them.

This would be my first time getting any type of 2nd lien on my properties, so I'm not experienced with using a HELOC to purchase new property. I know if I just got the fixed rate 2nd mortgage, then I would literally have the cash from that loan in my bank account, so that seems like it would be simpler when offering "all cash." I'd prefer to get a HELOC though, so that I won't be paying interest during the times when I might not be actively using the funds. For example if I go a few months between new projects and the funds aren't tied up in something waiting to be finished and refi'd.

Is making an "all cash" offer with the intent to write a check from my HELOC a legitimate way to purchase new property? Or would that be seen as deceitful since it's technically credit and not cash in my bank account? Any other downsides of using a HELOC that I might be missing?

I'm sure lots of folks here have purchased new property with HELOCs before, so it would be really helpful to hear some insight from those who've done it.

Is this some special program that only BOA offers? It must not be a fannie/freddie program if they're the only bank that offers it. This sounds like a no-brainer for someone looking to buy without much cash available to put down. 

 Unless the property happens to already be zoned R2 or higher, someone wanting to do this will technically have to convert the space you're targeting into an in-law suite instead of legally calling it a complete 2nd unit. It should basically be the same thing for all practical purposes, but just be aware of the zoning if you're looking to make a renovation like this.

If a SFR already has a basement, for instance, that has the space to be renovated into its own separate apartment, this should be an easy decision to have it done for improving cash flow. The most complicated part should just be having the plumbing, electric, and HVAC setup to support the new living space, if not routed to the space already. After that you just need the cosmetic stuff done like drywall, flooring, cabinets, appliances, etc.

@Sean Chua

I've been doing this in my personal home for the past couple of years. Two spare bedrooms and they're renting for a total of $1560/month right now. It pays my mortgage and around half of my total utilities. I'm in north Fulton county a little north of Sandy Springs. My purchase price was about $240k.

I'm super strict with tenant screening to make sure I'm bringing zero drama/headache into the house, and it's great.

@Nick Ruffini

I would go ahead and do it if you're fairly confident you can get the extra $100/month rent you mentioned. Those taxes seem insane for a $145k house though.

What area is it? Also what do you think the value will be after the $5k of renovations?

@Joseph Romano

Always have the tenants pay the utilities if at all possible. If you're the one responsible for them, there's a very good chance they'll leave power/water/gas on and running as much as possible since to them it's "free" and they want to take advantage. If it's a single family home that should be very simple to have everything transferred to their names.

@Sindhura Gade

I'd personally just keep it as a rental then, IF the HOA doesn't give you any problems. If you sold it for 450k, you'd end up with ~420k after paying your broker and other miscellaneous costs before any mortgage payoff. Even if you already own it free and clear, if you took that money to buy, say, a triplex instead, you'd end up having about $400k to spend (after factoring in your closing costs and whatnot) on the new property.

If that would rent for even as high as ~$3,500/mo total, I don't think the extra $500 or so per month would be worth all of the hassle of going through two sales. Not to mention the $50k in equity/wealth you'd lose.

The other option though (if you don't have a mortgage on it, or at least have a ton of equity) would be to sell it and use the cash as down payments to buy 2-3+ other, less expensive properties. That would earn you significantly more cash flow.

@Sindhura Gade

How much is the townhouse worth? And about how much would the market rent be?