All Forum Posts by: Asher Anthes

How much is prime rate related to the always changing mortgage market rates? I know the FED sets prime, but I guess the theory is if the economy strengthens, mortgage rates go up, then the FED raises prime rate?

I mean, even if my loan (which is prime plus 1.5%) goes up to 5.5% or 6%, as long as I'm reinvesting that money at a higher return, I should be good.

So, I cash out refi'ed my first property up to 80% at 3.75% fixed. I'm about to close a second mortgage to go up to 90% LTV and give me an additional $17,500 in cash out at 4.75%. I'm using all the money I get out of this house to re invest into real estate or other investment avenues.

I guess I'm a little nervous about the HELOC because its variable tied to prime (which is low now). What do you guys think about the future of the prime rate?

I'm considering using this strategy on my next house as well to generate some quick cash for more investment capital. Basically buy a property below value with an FHA 203.k 3.5% down, after repairs are done, hopefully have enough equity to cash out refi up to 80% and then potentially HELOC up to 90% on that one as well.

So, I would essentially have two OO financed properties that I've cashed out "free" equity that I've generated. Anyways, do you think leveraging this high is risky now? What is the future for those prime rates?

That's a good idea, I may try that when screening my next tennants. I've also heard something as simple as looking at how clean their car is can give you an idea of how they will take care of your property.

I understand what your saying about risk. I could pay down student loans and get a 6.5% return on investment FOR SURE. Or, I could buy rental properties on a mortgage or flip with cash and MAYBE get 20%-100% or more ROI, but I may lose money too.

I guess if I was married and had a family I would be a little more conservative. But I'm 25 and single, have a good income a can afford to leverage myself out a little bit.

I look at the first house I bought at $105,000. I've grossed $40,000 in the last two years in rental income (while living in the house myself). And my appraisal just came in at $175,000 (with about $20,000 of work put into the house). So, if I can do half as well on my next house, I'm still sitting good.

I always want to have $15-20k sitting in the bank in case something happens. But, at my situation that still gives me $50k to work with.

Well, only about $40,000 was actually from cashing out the equity. I will have two mortgages $650 a month on the first, which took my loan from $113,000 to $140,000. My payment on this is still less than it was on the $113,000 before (because of lower rate and getting rid of PMI). The second mortgage is at 4.5% for $17,500, I haven't got the final payment, but I believe its going to be $90ish a month.

So, I'm in a better position than before I refinanced (just looking at the first mortgage). I don't like the thought of the extra interest on the HELOC unless i'm investing it to make more than 4.5%. But I guess if I'm going to flip a house in 4-6 months, it's too risky to get into the markets.

Also, I have about $16,000 of student loans at 6.5, 5.5 and 3.5%. I was considering paying some of that down... but even 6.5% seems like a very low return rate when comparing to what I can do flipping with cash, or even buying long term rentals.

Okay, so I have one house, I just cashed out a bunch of my equity in it, refinanced at 3.75% fixed. So, now I have about $70,000 ready to invest.

My plan as of now is to buy another house with FHA 203k financing, move there with my roomates. So, I'll have a positive cash flow on the new house (while living in it). Then, rent out the first home (mortgage is $650 without taxes and insurance, and it should rent for $1600).

After I have both houses financed and cash flowing, I plan to do a cheap flip with all cash (20-30k purchase price, 10-15k in repairs).

One question I have is what to do with the 70k in the meantime? I hate having it just sit in the bank. I just met with a financial advisor and he said it probably wouldn't be wise to invest if I'm planning on taking it out in 4-6 months for a flip.

What do you guys think?

I see what you're saying Kyle Hipp, but all I need to do is raise my score 5-10 points and I drop the rate half a point. I've already got it deleted from trans union, so I just need it off one more, my mortgage broker does the rapid re score and I'm good to go.

From a financial standpoint, I've thought about paying off the student loans which are at 3.5%, 5.5% and 6.5% approximately. But, I'd rather invest my cash in flips that are going to make me 20% + ROI annualized. And.. I know, flips are not certain return on investment, where as paying off student loans are. But, putting my money into real estate is definately the way I'm leaning right now.

Lee Liberman I actually found a broker that has a bank that will use the "boarder" income as rental income. He didn't seem to think it was a big deal at all. I'm closing a refi with him now, and am doing a new purchase with him in the next few months. And my rate is the same as it would be had all that boarder income just been salary income instead.

I didn't like the idea of a mortgage broker at first, but he's pretty useful.

Jon K. Right now I charge a rent price per room, and then I split utilities at the end of the month between everyone. So, a typical month goes like this:

Gross rental income from 5 people: $1750
PITI: $885
Utilities + Cable and Internet: $550
CASH FLOW: $315

Keep in mind, I'm living in a nice big master bedroom with my own bathroom in this same house. So, not too bad a deal.

I do know there could be complications renting to a lot of single people. I would probably try to find someone I already know to be the lease holder, and then have them collect rent and pay me monthly, so I didn't have to worry about a bunch of checks and roomate drama. Utilities would be in his/her name.

I think I still may be able to get 1700-1800 total in this situation. I may still look at doing a single family for $1500. We'll see once it get's closer to time.

Stephen White I try to stay away from paypal in my other business simply because I don't like paying 2.9%. I'd rather the small hassle of depositing many checks once each week in the bank thats 2 minutes away.

I may be interested in something like Pay Lease.. is that a service by paypal? I just don't want to pay 2.9% or even 1.9%. In my opinion, the few minutes it takes to collect checks and deposit them is worth saving what would be over $1,000 in fees yearly if my annual gross rents were around $40,000.

Thanks for the input guys!

Dejan N. Thanks for your advice. My mortgage broker is able to do a rapid re-score. And I've been talking to the collection agency and they seem pretty willing to take the old collection off my report.

So hopefully this all works!

@Jean Bolger, I haven't been using my credit card at all, but I'm going to start using it and paying it off every month of course. I think this is kind of dumb, but whatever... gotta play the game!

Thanks everyone