All Forum Posts by: Stephen Hood

@Aristotle Kumpis the goal is scaling my portfolio. I am prioritizing cash flow and number of units to try to mitigate some risk of all the eggs in one basket.  I do think with a little patience another 100K multi family with $400 of cash flow is realistic. My goal would be to get two of these with 25% down on both and still have some leftover to update my current primary residence to build forced equity. My biggest hesitations with keeping this property is the rental market is pretty saturated and I’ve heard of some investors having to significantly drop their rent or have prolonged vacancies. My AC unit has another 3-5 years before it’ll need to be replaced so I’m thinking this may be a clean exit before large big ticket items start needing attention in the next 5 years.

@Matthew Kwan

@Matthew Kwan Thanks for the reply!  Unfortunately, Texas has a law prohibiting HELOCs on rental properties and I believe they also have a 70-75% max total loans allowed on the property which cuts into the equity I've built and would only allow for me to access 30K which would make it less appealing to go through the process for only 30K. If I sold, it would be 90-110K to use.

I have a current rental in Denton (3Bed, 2 Bath) that rents for 2,250/mo.  My Tennant is moving out next month and I am considering selling vs holding.  The problem I have about 120K of equity in the house that I would like to be able to access to put into some multifamily deals. However, with this being a rental property out of state, I have found it almost impossible to access any of this equity.  I have a 2.75% 30 yr loan on the property that is hard to give up. It cash flows gross $400 max and about another $450 goes to principal each month.  If I were to sell, I would look to buy another multi-unit property in a smaller town in the $100-120K range that cash flows $400. I just did a deal like this a few months ago on a triplex for 115K that is cash-flowing gross $600. So I would like to be albe to use this cash on 2 more of those deals.  Any thought are greatly appreciated

Quote from @Jay Hurst:

Quote from @Stephen Hood:

I have a property that I want to move into and  purchase but am running into a challenge with the offer being contingent on selling our current property. So I had an idea to get a loan from a Private lender for 400K (just under the asking price of the home) this house is already appraising for over the asking price but need some TLC. I would give the lender a 1% origination fee and payback the interest on the loan in 2K/monthly payment. At the end of the 12 months, I would refinance at 500K after fixing up the property and investing the profit from selling my current home in the new property. (I think this is realistic because many property with the same sq footage in the area with upgrades are going close to 600K). I would pay off the remaining 416K by getting a mortgage and hopefully have about 100K in equity.

Anyone have thoughts or holes in this idea? Or know any investors interested in this proposal?

 You just need a bridge loan. Commonly done. It will cost you more then you are proposing but not that much more. 

Thank you Jay. I think that would be the simplest way to go. Have you seen people who are weary of contingent contracts be willing to offer more in concessions at closing to help cover the bridge loan?

Quote from @Don Konipol:

Quote from @Stephen Hood:

I have a property that I want to move into and  purchase but am running into a challenge with the offer being contingent on selling our current property. So I had an idea to get a loan from a Private lender for 400K (just under the asking price of the home) this house is already appraising for over the asking price but need some TLC. I would give the lender a 1% origination fee and payback the interest on the loan in 2K/monthly payment. At the end of the 12 months, I would refinance at 500K after fixing up the property and investing the profit from selling my current home in the new property. (I think this is realistic because many property with the same sq footage in the area with upgrades are going close to 600K). I would pay off the remaining 416K by getting a mortgage and hopefully have about 100K in equity.

Anyone have thoughts or holes in this idea? Or know any investors interested in this proposal?

Looks like you’re asking for a private loan at 6% interest.  Realistic would be 12% with 3 points . 

I appreciate the info; this is helpful on getting a temperature on what would be realistic.

Quote from @Nathan Gesner:

A bank will only loan you about 75% of the equity. If the property appraises for $500,000, you would only be able to cash out $375,000.

Would this still be true as a primary residence or would we be able to find something like 5-10% down on a 30 yr loan? Just trying to wrap my head around the differences of if we got a standard mortgage up front vs. private equity and then paying that off by getting a conventional mortgage after seasoning.

I have a property that I want to move into and  purchase but am running into a challenge with the offer being contingent on selling our current property. So I had an idea to get a loan from a Private lender for 400K (just under the asking price of the home) this house is already appraising for over the asking price but need some TLC. 

I would give the lender a 1% origination fee and payback the interest on the loan in 2K/monthly payment. At the end of the 12 months, I would refinance at 500K after fixing up the property and investing the profit from selling my current home in the new property. (I think this is realistic because many property with the same sq footage in the area with upgrades are going close to 600K). I would pay off the remaining 416K by getting a mortgage and hopefully have about 100K in equity.

Anyone have thoughts or holes in this idea?