All Forum Posts by: William Harvey

Personally, I would try to get a HELOC on it. I'm a former loan officer turned investor and I think HELOC's are way better than cash-out refinances in a lot of situations. Obviously if your rate is high, it might make sense to completely recapitalize it and kill 2 birds with 1 stone, but if your rate is decent, a HELOC is advantageous because you are not touching the current debt, so your "blended" rate will likely be lower than if you did a cash out refi. Also, the HELOC doesn't accrue interest unless it is drawn on, so until you find something, it is not costing anything. I did a HELOC on a home I have in 2019 and the line is $38k (I don't have nearly the equity you do) and I use it to fund rehabs on flips. It is very useful. Hope this helps!

Lauren, love the house hack strategy. I did it on single unit properties and it works very well and on multifamily properties it works even better in my opinion, which it sounds like you're doing! I used to be a loan officer prior to getting into real estate full time so I understand the debt side of things pretty well. My suggestion would be to try to get a HELOC on a property while you are still living in it. HELOC's are cool because they don't accrue interest unless you draw on it. So it's like a pile of money sitting on your home that you can access at any time, that you'll only pay interest on when you use it. And you don't have to use the whole amount, you can a portion of it and only pay interest on that portion. It's like a very low interest credit card secured to your house. Cash out refi's are good too and rates are incredibly low, however you are paying interest from day 1 after you close on the refi whether you are using the money or not. In 2019 I got a $38k HELOC on the property I live in and it has been great. I've used it for flips primarily funding the renovation. Credit unions are pretty aggressive too. For instance, I got 100% LTV when I did mine. Hope this helps!

I quit my high paying (loan originator) W2 job with barely any cash flow at all from my properties and just banked on my knowledge, hustle, etc. If you already have income from the properties to match your earned income, then I would do that in a second. I can almost guarantee your real estate success will take off once you're full time and focused on it 100%!

I think it depends on the deal. The first flip I ever did (I had purchased 3 properties prior but all were rentals) the hard money lender gave me 100% LTV + reno cost. So it was very little out of pocket. But the reason that was the case is because it was a great deal. He analyzed it based on ARV but since the ARV was so much higher than the purchase price, it allowed him to fund the entire thing.

So I think the answer to whether #1 or #2 is better depends on how solid the deal is and how well you buy it. If you buy the deal for 50-55 cents on the dollar, the lender will likely be able to fund most of it with option #2. I think that option is better if the deal is really good, and option #1 is better if its a good deal but not great. That's just my quick analysis and hope it helps!

Arta, I have a few rental properties and can totally agree that at times it is the most infuriating thing ever. I don't think that comparing properties managed by yourself personally to investing in stocks is an "apples to apples" comparison. Obviously with stocks you invest and then have no responsibilities in regards to the operations of that company. 

I would compare stocks to passively investing in real estate deals. And I think when looking at that comparison, there is no competition at all (assuming you're educated and don't deploy money with a bad sponsor). As I mentioned, I started having all of the headaches associated with managing my rentals and I shifted my focus to passively investing and it has been night and day. A deal I did in 2019 which was a $25k investment in an 84 unit apartment acquisition delivered some solid distributions throughout the year and then I was issued a K-1 with a "loss" of -$24k. So the deal paid me throughout the year, and then I was able to lower my taxable income around $24k (since I'm considered full time real estate per the IRS). And now, the sponsor is looking to refi and return capital to the investors. If that is the case, I'll get all or most of my money out of the deal yet retain my position in it. To my knowledge there is nothing on Wall Street that comes close to this. 

I would suggest looking into the passive side of things if you hate the headaches that come from the active side of real estate investing. There are lots of different asset classes (multifamily, self-storage, retail, office, industrial, mobile home, etc...) and you can figure out what interests you. Hope this helps!

Zack, since you're not on the loan it won't show up on your credit report. Being on title to the home has nothing to do with your credit so you'll be good next time you go to get pre-approved. I'm a former loan officer and this is a very good and common question. Hope this helps!