All Forum Posts by: Ash Hegde

General thoughts without knowing your full financial picture: 

For something short term like a flip (or the rehab part of a BRRRR), I think a HELOC is better. The rate is variable, but you'll be paying it back fairly quickly. You can also draw it again for the next project without applying for a new loan.

If you were taking out equity for a down payment on a turn key/long term rental, a fixed rate equity loan or refinance would likely be better. The longer your balance will be outstanding, the better off you are with a fixed rate loan. 

I saw @Dan Sheeks on BP money episode 255 and was going to refer to his website and materials, but he and Travis beat me to it lol. I have not personally read his book but his stuff is aimed at teens and is probably a great resource for you. 

@Daniel Gugliotti some good advice here. I'd like to second what David mentioned - if you decide to partner up, make sure to spell everything out in an operating agreement. Often people skip this step when working with friends and family but it is very important. Partnerships can help you reach bigger and better properties though, best of luck! 

For an investment property in an LLC, you'd be looking at a DSCR loan and 20-25% down payment. This loan type would not take your income into account, but rather the rents from the property vs the mortgage. Friends and family or a money partner are a couple of ways to get the capital.

For something with a lower down payment, you can look into FHA and get up to 4 units with 3.5% down. This would take your personal DTI into consideration though, and require occupancy in one of the units.

@Ryan Tongue you are correct, it's a non-conventional form of financing. Most lenders have contacts for hard money, at the top of the page there is a "find a lender" tab if you want to search that way. 

Correct on DSCR as well, you would qualify based on the rents vs mortgage and you would use this loan to pay off the hard money loan. A hard money loan is meant to be short-term, about 12 months, but you can get a 30 year fixed on a DSCR loan.

Nice job saving up 50k to get started! You can BRRRR without conventional financing or having all cash. For the purchase and rehab, you would start with a hard money loan, which generally requires 15% down. After that's finished and it's ready to rent, you would move to a DSCR loan for your long term financing. Neither of these consider your personal income, though they will consider your credit, so make sure that is in good shape.

Happy New Year @Josh Michael. Connect with @Ray Hage, he lives and invests in the area and should be able to help. 

From my understanding:

Loan officers can't give referral fees to real estate agents or even other LO's. I believe they are allowed to split/refer within the company they work for though.

Real estate agents are a little more lenient, they can refer to another licensed agent for a fee, but couldn't pay a fee to a loan officer.

If you are an LO with your real estate license, be careful about getting real estate referral fees and loan commissions on the same transaction.  

That's another way that people find money to start investing - home equity/cash out refinance of existing property. This can work - I personally would be very careful using my parents equity and start small but everyone has different risk tolerance. In addition, lenders for larger commercial multifamily often want you to have previous experience managing rentals. 

I would probably start with a 4 unit property using a DSCR loan, which will still be based on the property rents and not your personal income.

Thanks @Ray Hage - VA does have a 0% down option. Hard money lenders are not going to take second position to provide a down payment on another loan.

Carlos had a couple of good ideas for down payments. I think most just save cash from their day job. Some people will start with wholesaling to learn how to find deals and save that money. Finding a money partner is also an option.