All Forum Posts by: Ash Hegde

Having your son house hack is a great way to get started! 

Hi Stephanie. If you plan to do this process over and over again you might be better off with the cash out refinance and buying/rehabbing your projects in cash. You'll be able to recycle this cash with a fixed refi rate. Hard money usually requires 15% down but will come at a higher interest rate and fees for each transaction. 

You have it right. Your lender should be able to give you estimated closing costs and new monthly payment so you can see how much cash you will actually get.

Agree with Robin's answer, the amount of cash you actually get back will be the 360k, less closing costs, minus your current loan amount.

That's correct. That percentage may change based on what you qualify for on the debt to income side (or rents vs mortgage if it's a DSCR loan) but that is the right math.

I think you would be better off with your own investing team and owning 100% as many have mentioned. If you don't want to deal with renovation, look for something move-in ready where the numbers still work. If you don't want to deal with the property management yourself, hire a good property manager. Even with paying extra for those things you will still likely come out ahead over having a 30% split to someone handling that for you. 

Low value properties are often attractive to new people but can be risky. The cash flow might be high percentage-wise, but it's small in dollars, and a major repair or bad tenant trashing the place can erase that cash flow for many months. They also do not usually appreciate very much. Some people do very well with them though. 

Hi Marie, if debt to income ratio is stopping you, you can look into a DSCR loan. That type of loan ignores personal debts and instead looks at the rental income vs mortgage of the property you will purchase.

@Bobby Nilsen you are correct about having to pay the tax upon sale. A cost seg is a deferral of tax with immediate benefits, but it doesn't go away forever. The way cost seg and other tax benefits work, real estate becomes a buy and hold forever game. 

There a couple of things you can do depending on what your goals are - If you need cash, look into a refinance. If you want to sell and buy other investment properties, look into a 1031 exchange. On a regular sale, you will be hit with taxes on all the benefits you took. 

Do you have a personal guarantee on the loan in your LLC? If so, even if it doesn't show up on your credit report you should be reporting it to the lender when you apply for a mortgage in your name.

Numbers-wise, you will be saving $365 a month, so if it costs you 15k of closing costs and penalties, your payback period is 41 months. If you refi within that time, you will have lost money, but if you hold it closer to the 5 years before the ARM triggers you'll be saving money.

 With a fix and flip loan the lender will cover the purchase and rehab costs up to 70% of the after repair value. You will need to cover some costs up front based on the draw schedule - they will periodically inspect the progress and reimburse your costs. This is also a term that can change with a good lender relationship and several flips of experience, there are programs where the lender will front the costs rather than reimbursing.