All Forum Posts by: Andrew Garcia

Hi @Paige Bostic, congratulations on taking the leap into house hacking!

It is certainly a great tool on the path to financial freedom, however, it does have its shortcomings.

The biggest one is that you are now a property manager. 

Now you have to deal with the three Ts.

Make sure that you are prepared to deal with maintenance issues and tenants before you take the plunge. 

If you are ready to do so, then start looking for properties!

Hope this helps! Let me know if I can be of any assistance.

Hi @Nathaniel Lowe, it is your cashflow before paying taxes / total cash invested.

Basically, NOI - financing expenses / initial equity.

For example, let's say you have a single-family that rents for $2,000 per month and runs at 20% operating expenses (maintenance, cap ex, management, vacancy). That means your NOI is $1,600.

The mortgage payment is $1,200. $1,600 - $1,200 = $400.

Now for your initial equity. You buy the house for $200k and put 20% down. That means your total cash invested is $40k.

Make it an annual basis so $400 * 12 = $4,800. Then, $4,800 / $40,000 = 12% COC.

Hope this helps! Let me know if I can be of any assistance.

Hi @Matt Sora, that is a really low loan amount for multifamily so it would be tough finding financing with that.

If the deal is solid, I can refer you to a lender that might be able to do it.

Multifamily financing is much more about the deal than the individual compared to residential.

Hope this helps! Let me know if I can be of any assistance.

Hi @Dustin Sanders, if the HELOC is for an investment property, you will likely need W-2 income.

Finding lenders that do investment property HELOCs is tough enough so finding one that does not verify income and does it on investment properties could prove difficult.

Your best bet would be to find a local bank or credit union and work out terms with them.

Hope this helps! Let me know if I can be of any assistance.

Hi @Louis Zameryka, a cash-out would likely not be your best option.

A better option would be a HELOC if you are exiting the syndication within the next 3 years or a HELOAN for longer-term deployments of capital.

Either way, your blended rate would likely be in the mid-to-high 4s. Much better than 6.5%.

Plus, you can likely go up to 80% CLTV on the property.

Hope this helps! Let me know if I can be of any assistance.

@Account Closed That sounds much more like it. If you want a referral to a lender that can do HELOANs, feel free to connect.

Hi @Adam Dordea, the underwriter will likely catch this and make you wait the full year prior to funding the loan.

They do not want to be held liable for approving the loan while you are not yet at the 1-year mark.

For all they know, you will move into the property on closing day.

In short, unless the underwriter misses it, it could cause the property you are trying to buy to be delayed by 2 months and may cause you to lose the contract and EMD.

Hope this helps! Let me know if I can be of any assistance.

Hi @Account Closed, that is some really funny math.

Assuming a 30-year term, the principal + interest portion of the cash-out refinance would be well over $1,330. Maybe we are both missing something.

The only way I could think of that is interest only or negative amortization or something like that.

I would offer an alternative solution. Get a HELOAN. Assuming you did an 80% LTV loan in September, you would have approximately $250k left on your mortgage.

Doing it at 80% gives you $98k back and your blended rate is now 4.87%. Basically 1.25% lower than the cash-out refinance.

I think this option would be better for your scenario because HELOCs are generally best for deploying as short-term capital.

HELOANs act as a 30-year, fixed-rate, fully amortizing the second lien so they are perfect for deploying into a long-term asset like real estate.

If you plan to use the funds for a rehab or a flip where you will pay back the HELOC in 6 months, I would recommend that option.

Hope this helps! Let me know if I can be of any assistance.

Hi @Michelle Phimmasone, the 25% down option seems like the best option if it is available.

It is essentially a 21.45% ROI.

It may not be available and you may have to buy down the rate.

The broker likely did not know that it would not meet the DSCR ratio but if it was tight, they should have told you.

I wish you the best of luck and I hope it works out. I am sorry that you are stuck in this situation.

Please let me know if I can be of any assistance.

Hi @Eric R. Dehner, unfortunately, for conventional financing, there is no real workaround.

If there are comps near the property that you can find that the appraiser cannot, you can provide those and you may be able to get approved.

However, if there are no similar comps, it will be very tough to get it approved through Fannie/Freddie.

The property cannot be looked at as a triplex because all three units do not share a roof. Similarly, a SFH with an ADU cannot be considered a duplex.

The appraiser cannot look at each separately and add the values either as that is against standards and would still be unsellable to Fannie/Freddie.

You can look at getting a portfolio loan from local banks/credit unions. You can also look into the non-QM route.

They might be able to get a workaround.

Hope this helps! Let me know if I can be of any assistance.