All Forum Posts by: Spencer Harvey

Hi John,

Congrats on your purchase!

Give Blue Line Window Washing a call (they also do snow and have a few contracts with me). Let them know I sent you -- you might get a slight discount!

https://bluelineww.com/snow-removal/

I'm looking to find a lender willing to take a second position and issue a line of credit against a small portfolio of investment properties, or against several individual properties. All are non owner occupied SFH and small multifamily properties used as rentals. There are 30yr notes in place and they are held in my personal name. Cash out refi is out of the question for now.

Any suggestions?

@Spencer Cornelia first off, great name!

You mentioned a lot of valid points. The part I don't get is about a recession. Hypothetically, let's say I was 100% leveraged with a property using the HELOC for downpayment and then conventional loan on the rest. I have it rented for XXXX, making a few hundred a month in cash flow after expenses in a B neighborhood. Other than the rates on the HELOC going up, what other risk am I looking at? The conventional loan payments will stay the same, rent will likely stay the same or drop slightly, and property values may go down temporarily. Even if that's the case and I plan to hold it long term, what would be my biggest risk?

On the other hand, it sounds like you have quite a bit of experience. Do you have any recommendations on a different strategy to plan I should to take to build my portfolio given my financial situation mentioned above?

@Nathan Gesner that’s what I ended up doing as well and I think I will continue to do so in the future. The slightly discounted rent rate is a lot better than 2-3 vacancy in the dead of winter while I’m paying for heat. 

@Patricia Steiner thanks for your reply. I didn’t think of it like that but that makes a lot of sense.

I’m considering doing a MTM lease for a new tenant for the first time. Ideally, I’d like my leases to begin/end in spring or early summer as it’s more difficult to find quality tenants the closer it becomes to winter here in Wisconsin.

I’m curious to know if anyone has input on the legality of using “blackout” dates in a MTM lease. My thought was to restrict moving out between say November-March which would set me up for a more advantageous timing to get it rented. I realize this makes the lease not necessarily MTM, but still provides more flexibility for the tenant.

Are there any legal issues with this, or as long as it’s in writing and agreed upon, ok?

@Nathan Gesner so would you say just a double deposit and then standard rent amount we agreed upon every month after that? Or make the upfront payments the security deposit and charge an equivalent to what 6 mo rent would be for the deposit?

I’m curious to see what other things about this...

I have an applicant who is interested in a rental property I own. They are moving from out of state due to a job relocation and selling their current home. They wanted to get a feel for the area (WI) and are planning to wait a while to purchase a home here.

One of the two filed for bankruptcy in 2017. Everything else appears current in the background check and has a salary 4.8x higher than monthly rent. The lease is going to be for 6 months in order to accommodate them trying to find a home to buy, as well as setting myself up for a more advantageous time for leases to start and stop (June).

What are the drawbacks of having them pay for the full 6 months rent up front? I usually deny anyone with bankruptcies, so my thought was to have them pay up front and I wouldn’t have to worry about non payment. They both agreed to do so.

Any input would be appreciated!

I appreciate all the replies  

@Ley Nezifort I tried to find a property for quite a while that would work with the BRRRR strategy but even if I were to use the entire line, there aren't any properties around here for that price, at least not anywhere I'd want to invest. I entertained the idea of obtaining a conventional mortgage for the acquisition, rehabbing it, and then refi. The double set of closing costs would be a pretty big blow and probably put me in the same spot as if I used it for a downpayment instead.

Same with hard money, with 10% & points plus the 6.25% on the HELOC, I'm not sure I could make that work unless I'm missing something.

@Kevin Grove

@Kevin Grove a rough estimate I came up with was 6-8 years, depending on the purchase price, unless I put some of my own money towards it. Definitely something to think about though. I’d hate to get stuck holding the bag if my line went up to its max 21%. That was my main concern. A lot can happen in 6 years.

I’ve been trying to figure out a way to purchase more rental properties and grow my portfolio. I currently own two properties that cash flow nicely, plus my primary residence which I have ~$70k in equity.

I opened a HELOC on my primary home a while back and have gone back in forth in my own head on what to do with it. My initial plan was to use the HELOC funds as down-payments on a couple of additional rentals, and then use the cash flow to pay down the money taken from the HELOC. Over the course of a few years, the additional properties would essentially be free and my HELOC balance would be back to $0 so I could rinse and repeat.

That being said, I've heard several times to stay away from becoming over leveraged. While it seems to be a common suggestion, what exactly does that mean? If the additional properties I purchase using the HELOC cash flow and bring in positive income, what risk is there by being "over leveraged"?

I’m looking for input or advice on how to proceed given my current situation.

Thanks in advance!