All Forum Posts by: Shane H.

If your home is paid off - and it's worth $400k 

Then you have it on easy street -- I dont know who you bank with but they may be a good place to start -- find a place that will approve you for a HELOC (Home Equity Line of Credit) and your house is used as collateral --

The interest rate they quote you will be based on credit and then how much of a LOC (line of credit) you request and are approved --- then what drives the rate as well is how much that line is as a percentage of your primary residence Value --

IE you take a 60% LTV so $400k * 60% = $240k HELOC -- the HELOC can then literally be used as a check book - normally fees are very minimal to set these up -- app fee is normally just to cover the cost of the appraisal on your house. You typically do not pay any money or fees unless you are using part of the credit line --- if you use it - you are then charged interest for the amount outstanding -- you can pay interest payments only - principal and interest etc.

So you are in a good position - if your bank does not provide one - call around to some of the more local/regional banks that you know have been around a while and are well established - you can probably find plenty of banks willing to set one of those up.

You could use the HELOC to pay for the purchase of the house and the rehab - then when you're done - find another lender and BRR out of it - -- then use the funds to pay your HELOC off and start again.

To have a $400k house paid off is a very good position to be in if you are willing to use it as collateral for business purposes.

This is just a hunch - but if you find a bank willing to lend up to 95% or 90% LTV for a HELOC - I'd take an educated guess that bank will offer one of the better deals to "A" get a HELOC set up and "B" interest rate - especially if you stay in a more conservative LTV - such as 70-75% or less -- each bank will have it's own underwriting requirements - but around where I live - they are really aggressive and friendly on their HELOC terms if you keep your LTV at a certain ratio or less -- they figure that giving you the HELOC with so much value left in the house is a pretty safe bet for them. Anyways some food for thought.

@Chevis Rebstock -- Curious -- the $147k profit on the live in duplex -- do you care to elaborate more on that deal?  Was it in Wichita?  (What particular area? -- would love more details)

@Dan Inness   If you provided an intersection I am probably familiar with the area the duplexes are in -- I'm kicking myself in the butt for not getting in about 8 yrs ago on the building boom of those - the #'s weren't fantastic (I thought at that time) but the lending you could get and how low you could build the duplex it was a phenomenal deal -- hence why everyone is selling after not holding -- I think due to BP and other places a lot of out of state and dumb money has moved into Wichita pushing the prices of these up - I'm 99% you'll have ridiculous specials depending on where they are - especially if they're in Kechi, Park City area.  It really just depends on what you're looking for - sounds like you dont have that much to put down -(relatively speaking to the purchase price of the duplex) -- there are plenty of SF rentals in the 80-100k range in decent parts of town where you'll earn a better return IMO -- if you had more to put down on the duplex reducing your debt service it'd be worth it - but with having nearly $50k in cash to play with you can get more SF in that affordable price range.  Let the dumb money keep overpaying for those duplexes -- I personally dont want to own a duplex unless I'm in at a 1.2-1.3% -- I'd do 1% if it's new - but i'd want a damn good quality job done on the build - most of these duplexes are built "economically" and the specials are a real kick in the nuts.  My personal experience having duplexes (older ones) in Wichita -- I've owned 2 since 2006 -- the first one parlayed into up to 10 doors at one point - so it panned out alright -- anyways turnover was higher than what I've had in more blue collar single family  homes.  Turnover costs you money -- especially when it happens in Nov-Feb timeframe- though the rental market we're in is strange but it still sucks to heat a house and worry about those things that time of year.

Easiest way when typing a reply -- type @ symbol then question mark -- @? -- when you do that it will bring up a list of all the people who have responded to this thread if you are not quoting someone - you can select their name and it will give them a "notification" they were mentioned so they know to come check the thread.  Or @ (with no space) then start typing the person's name.

@Eric Lee Nation    I did ins claims in another life for 14 years - I do not recommend that EVER as someone's employment but I did learn a few things.

Here's 2 things agents or no one will tell you -- your Replacement value (RV) on the house is JUICED up way higher than what's realistic -- however you have a relatively inexpensive house so it's not much of an issue - but typically the reason they juice the RV is to get your wind/hail deductible higher -- typically 1%, 2%, 3%, 5% of RV is what your wind/hail deductible will be even if you had a $1k or whatever other deductible they offer for any other peril -- so follow me for a minute - you bought a rental for $150k -- they've juiced the replacement cost to $250k the most likely loss in KS or the midwest in general is going to be wind/hail --- the math actuarial nerds do this so the casino or the ins company in this case has the upper hand -- do the math what a 2% or 3% deductible on a $250k house will be -- I have a commercial building insd for over a million -- the lowest wind/hail ded they will give me is 5% -- the only reason I have ins at this point is I'm required to -- the wind hail coverage is worthless to me with as high as the deductible is.

Anyways with that out of the way - ask your agent if you have a 3% option - at that RCV cost they figured of $99k that wouldnt be much different than the $2500 all perils coverage you have now -- Also I'd wager as someone mentioned dropping the med payments to others coverage -- it probably wont make a bit of difference in your policy cost -- I could be wrong - but I'd guess $25-50 dollars a year -- your coverage is the price it is due to the perceived wind/hail risk the company is putting on KS.

I'm with Big Red and have been for a # of years -- your price to insure that house is on par with what I get from them for that replacement cost -- though i think State Farms game is a bit different they really jack up the Replacement cost so I have higher wind/hail deductibles -- I'd make out good if the house burnt down or a tornado destroyed it - but for a hail claim there wouldnt be much there.

***Also I couldnt tell from your paperwork you uploaded but ask your agent or maybe you know -- do you have an ACV (Actual Cash Value) or RCV (Replacement cost value) policy ????   This mainly pertains to your roof - IF you have an RCV policy - do not switch anywhere else -- that is a good price and a good policy -- if it's ACV you can shop around -- try Shelter too -- I worked for them - all my coworkers were fair -- I just wont get a policy there -- something to do with not ******** where you used to eat and if I had a claim it'd be weird to deal with my former co-workers -- would rather deal with people I dont know. 

@David Mo - would appreciate any FB invites to Milwaukee RE groups for sure -- let me know how I can repay the favor.

How do I find you on FB?

@Brock Mogensen @Marcus Auerbach

Wichita has garnered way more attention than I ever thought i'd live to see - it's rightly justified by the strides the city has completed over the years but it's also driven prices up like crazy and a being a little big town a few people control the market on larger assets.  

Anyways noting you said your homefield advantage is big - still curious about Milwaukee after taking a vacation (I know odd place to go but had a reason to be there) in July for 6 days.  Stayed in Walkers point and loved it.  Thought the neighborhood and surrounding areas were awesome - drove around quite a bit and blown away by the investment/energy, coffeeshops, etc etc.

I live close to KC but dont know it as well and the multi's I've looked at there are garbage deals compared to what I'm seeing in your hometown.

Am I crazy for wanting to invest there?  Thoughts on Walkers point or any recs for a solid property manager or Realtor?

 Without having to join the FB group you mentioned first -- is "Brew City" geared towards investors or just to learn about the city?

Anyone invested in Milwaukee purchased any multi family or Mixed Use Retail/Multi family around Walkers Point?   We stayed there in July and loved the area.  Drove around quite a bit of the town.  Milwaukee is a hidden gem - couldnt get over all the investment.  

@Crystal Smith  I'd love to connect -- My wife/I and 2 kids went to Milwaukee in July and absolutely loved it.

Anyways what we saw was simply amazing, the energy, friendliness of the people, all the restaurants/bars, neighborhoods, amazingly clean, lots of investment going on etc etc.  Perusing the RE market while we were there and exploring some neighborhoods there seemed to be lots of good deals - better than my home market by far at first glance.   Will shoot you a message if you'd be interested in discussing further.