All Forum Posts by: Alex Corral

Say for example you have $100k in cash reserves, and also have $200k equity in your personal home. You want to buy a few homes for buy & hold rentals. Is it better to first take out a HELOC, before using your cash reserves for down payments on multiple homes? Should you use the HELOC money for the down payments instead of the cash reserves? Will the extra HELOC debt be an issue for getting conventional financing? Can it be used since it's borrowed money? If you use your cash reserves 1st, will that be an issue to later buy more properties using the HELOC money since you've spent your cash reserves and getting into more debt using the HELOC for down payments? Help!

0 Votes

Try watching some YouTube videos. Then the BP calculator will make sense. It is excellent.

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Great info. Cleveland has a lot of bang for the buck. Too bad the property taxes are so high!

0 Votes

Todd Fry I'm sorry you had such a bad experience with this! And I agree with Jay Hinrichs . I would try to sell in the next 6 mos to reduce your risk. I do want to thank you for sharing though, as well as everyone on BP. I had been talking to James from MI, and thanks to BP, I asked him to take me off his mailings. He asked why, I told him I just didn't trust MI, or Oceanpointe. At least not now, but maybe in the future after they were a proven vendor. I will admit MI has great videos, which ultimately led me me to BP. I'm trying to buy 6-7 properties and dodged a bullet with those guys. Alex

5 Votes

I prefer Arby's haha. I would like to visit but probably can't in the near future, so next best thing is to try to find the best stats. I see Columbus is growing fast, vs Cleveland is stagnant or losing population. I'm just looking for the best cash flow, since it doesn't seem like appreciation is much in either city.

0 Votes

Which do you you prefer for a MFH and why?

Columbus is listed as the fastest growing city in the Midwest, but there are some great REI teams in Cleveland. I haven't been able to compare prices & occupancy rates.

2 Votes

Listing Agent should be donating his commission to make up for his dumb mistake.

9 Votes

Thanks for the reply @Andrew B. Needing the property to appraise for the purchase is a huge plus on TK purchases IMO.

0 Votes

Originally posted by @Brenda Wright:

Use the 1% rule.

If you have a 60k mortgage you need to be above 600 a month cash flow from the tenant. This is before the management company, maintenance fee, insurance, mortgage etc...

Rule 2: Learn to compound, it's why 30 years is always better than 15 years.

You mean, you need to be above $600 RENT from the tenant right?

30 years, is not always better than 15. I think it's been proven in this thread.

1 Vote

Originally posted by @Jerome K.:

Originally posted by @Alex Corral:

Originally posted by @Jerome K.:

Originally posted by @Alex Corral:

Originally posted by @Joe Villeneuve:

. 15 year 30 year
Loan $80,000 $80,000
Term 15 years 30 years
Interest 5.5% 4.5%
Mo Pmt $653.57 $405.35
Extra Pmt N.A. $248.32
Adjusted Payoff N.A. 16yr; 3 mo
Total Interest Paid $37,660.02 $27,269.75

Joe, I think the numbers here are wrong.

This is what I'm getting with an online amortization calculator:

15 year 30 year

Loan $80,000 $80,000

Term 15 years 30 years

Interest 4.5% 5.5% (30 year rates are always higher)

Mo Pmt $612 $454

Extra Pmt N.A. $158

Adjusted Payoff N.A. 16 yr; 3 mo

Total Interest Paid $30,159 $83,523

$53,634 is a HUGE amount of money to be giving the bank.

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I think you may have ran these numbers wrong (total interest paid). If you factor in the extra payment ($158/month), the total interest paid comes to ~43,309. You pay more in interest because the longer term note has a higher interest rate. If both notes had the same rate, the payoff, and total interest would be the same. If less debt is your goal, then this is a good strategy. If you are "ramping up", the higher cash flow is better (just my two cents).

@Jerome K

Are you saying if you pay an extra $158/month on the 30 year loan?

I meant to show it as the difference in minimum payment in a 15 year note vs 30. As you can see that $158 which is a small difference IMO, saves you $53,634 total interest paid. If you decided to pay an extra $158/month to your 30, you will still pay more interest mainly because you had to take the higher interest rate. You still save a lot compared to sticking with the minimum on the 30 year, but still pay a lot more than taking the 15 year rate from the get-go. Hope I understood you correctly.

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Your table labeled it as "extra payment", so I assumed it was an extra principle payment made each month (to match your payment on the 15 year mortgage). What I was saying is that there really is no difference (other than the lower interest rate) in the 30 year mortgage and making the payment "as-if" it was the 15 year payment (454+158). Basically, the 15 year mortgage takes what would be your extra cash flow, and forces it into the principle of the asset, making it very difficult to use that money in the future (unless you take out another loan against it). I would say that's a good strategy for a "mature" business looking to pay down debt. But for "growth" businesses, the extra cash flow now is much better put to use.

Ok, yeah. I only labeled it "extra payment" for simplicity sake, to match Joe's post. Yes, you can try to pay a 30 in 15, but at the cost of 1% and $10,325.

1 Vote

All Forum Posts by: Alex Corral

Alex Corral has started 18 posts and replied 142 times.

Post: Cash reserves vs HELOC

Post: How to analyze a buy and hold property?

Post: 2018's Hot Rental Property Markets In Cold Climates

Post: Morris Invest Review (after 8 months of ownership)

Post: Columbus vs Cleveland

Post: Columbus vs Cleveland

Post: Seller Wants to Back Out After Contracts Are Signed

Post: Cash vs Finance TK companies

Post: Those who finance investment properties

Post: Those who finance investment properties