All Forum Posts by: Torrell Palmason

Using a HELOC is a very common method to purchase new investment property as it allows you to leverage your current properties and put the money into a new door without using your own cash in the bank. After closing, you could potentially get all of the investment put in by the HELOC back out through a Cash-out Refi, if it was a BRRRR and could pull enough equity. Once your funds are returned you could do the same strategy again provided your DTI can hold up.

There are several benefits that I think make a HELOC a stronger tool for investors than a Cash-out Refi. On the HELOC you will have payments on what you have drawn rather than with the Cash-out you start paying for the full amount of the Cash-out Refi. Another benefit of the HELOC is you can keep using it as long as you continue paying the drawn amount down. A downside with Investment HELOC is the Draw Period is 5 years, at the end of the 5 years I would recommend replacing the old HELOC with a new HELOC that should be at a higher loan amount if you figure in Appreciation and increased equity.

So an Investment Property HELOC is a bit harder to find than the Standard Owner Occupied HELOC. That being said a great option is Quorum FCU. The CLTV on a their Investment HELOC is 80% with a minimum credit score of 680. The will also require reserves for loans of $50,000-$250,000 of 12-18 months.
https://www.quorumfcu.org/lend...

Best of Luck!

A strategy you could use is if you are both wanting to get into real estate is purchase together to get the highest buying power(provided you are both working). 

The only problem you could have down the road is if you have acquired 10 financed properties and want another. If you are both on each of the 10 properties you will be capped out. Getting around this cap will require you to refinance the homes in a portfolio loan or another option would be to offload 1 partner off of the loans through refinancing, thus freeing up some slots for that partner.

Just did a quick search on Taylor, TX and was surprised you could pay cash for those with the equity you spoke about. If you are planning to go that route @Kevin Sobilo is right to say do all 3 refinances at once so you can get the low fixed rate instead of the Adjustable rate HELOC.

Good eye for trying to get in the area prior to the plant being built there. 

Best of Luck!

Crane Xu have you considered using a HELOC on the 2 properties you will have free and clear after your refinance?

The closing costs on a HELOC are less and you would only have payments on what you use for the next investment property. HELOCs will generally have 5yr draw period on an investment property (you might find a couple that have a 10 year draw period) at the end of the draw period your investment should've appreciated and you can take another HELOC out on the property to payoff of the old and increase your credit limit.

A great Investment HELOC lender I know of is Quorum FCU. They will go up to 80% CLTV with a minimum credit score of 680.
https://www.quorumfcu.org/lend...

Best of Luck!

Using a HELOC is a very common method to purchase new investment property as it allows you to leverage your current properties and put the money into a new door without using your own cash in the bank. After closing, you could potentially get all of the investment put in by the HELOC back out if it was a BRRRR and could pull enough equity. Once your funds are returned you could do the same strategy again provided your DTI can hold up.

If it was a rent ready home then then you might have a harder time getting your HELOC funds back as there will be no significant increase in value. While you might not be able to get all the cash back once you begin cash flowing you should be able to pay back the HELOC so that you can use the HELOC to Invest again.

Best of Luck!

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If you refinanced this as an owner occupied you must occupy the residence for one year. If it was refinance as a Second home you must maintain the availability to live in it for 1 year. This is where people will use it as a STR and schedule themselves 14 days to live in the home as well to meet occupancy requirements.

A Second home with Fannie Mae requires 90% LTV or 10% Down whereas a 1-unit Investment property is 85% LTV or 15% Down. A Second home is restricted to a 1-unit, while an investment property for 2-4 unit would be 75% LTV or 25% Down.

20% Down is generally considered "The Down Payment" because it will remove the need for Mortgage insurance and lower your monthly payment.

Please See below for the requirements for a second home.


Best of Luck!

Hey Henry a great option for a HELOC with a 10 year Draw and no annual fees is Quorum FCU.

Best of Luck!

The most common low money down is a FHA as it is 3.5% down on 1-4 units. There are various affordable loans through Fannie/Freddie but once you get into 2-4 Unit FHA will get you in the home for the least out of pocket.

If you have served and are eligible for a VA loan, they offer 100% financing for 1-4 units which is a great opportunity for current and prior servicemembers

Once you have closed on the FHA and you reach 20% Equity you can refinance into a conventional to get rid rid of your mortgage insurance on average with the 3.5% down it will take about 2 years.

Best of Luck!

Starting out everyone's personal finances look different. What you need depends on what you are planning. 

If the plan is to House hack a 2-4 unit I would recommend FHA to get started as is a low down payment at 3.5%. The downside is the Mortgage insurance that is there for the life of the loan however once you reach 80% LTV you can refinance into a conventional which will remove the Mortgage insurance.

If the plan is to get a non-owner occupied loan then you will need 15% for a 1 unit or 25% down 2-4 unit. This is what I would generally recommend for people with the down payment or that are already in the Investing game.

Regardless of how you want to get into this I would recommend you have whichever down payment you want to go with as well as 3-6 months of reserves. Also, as far credit score goes you want a 740+ as this will get you the best rates but you can get started with most lenders at a 620.

If you have any other questions don't hesitate to message me as I was trying keep this nice and broad and not dig too deep in 7 different directions :)

Best of Luck!