All Forum Posts by: Brett Chandler

Wondering if anyone out there has done a parcel merger? I own 3 adjacent lots, totaling 8.5 acres. Our home is on .5 acre, one non-buildable vacant lot is 2 acres, and one 6 acres raw land (mostly natural resource zoning overlay). Just trying to figure out if there is any benefit to combining these lots, besides resale value and being able to classify our home as 'waterfront' with creek frontage. Not sure if there is a property tax benefit if our home is on a larger lot with natural resource overlay (maybe some kind of deferment?), or if combining would increase the value of the vacant land that has a pretty low tax bill currently. Side note - part of the 6 acre lot is outside of the natural resource overlay, and zoning would allow for 8 homesites, if I could figure out access and utilities. Not really interested in developing at this point, but I don't want to mess up future possibilities with a consolidation now. I appreciate any insight. Thanks!

@Alex Lloyd Typically, your minimum payment would be based on simple interest of the loan balance, with the variable rate. Some HELOC products have the option to lock some or all of the balance into a fixed, amortized payment, but you would need to check with your servicer.

@Ethan Reetz, Nice work getting a jump on your future! As I'm sure you know, there are many sides to real estate. It all depends on what you want to do. Are you wanting to be an Agent, Investor, or something else? If I were your age, I would look at a construction trade school. No school debt, on the job training, and a skillset that would give you good income when you work for a customer/employer, and significant labor cost savings on your own properties when you can do the work yourself. Good luck!

@Maya Bulleit, Good questions! And congrats on getting yourself into that strong equity position. The home improvements won't affect your appraisal value enough to guide that decision one way or another. How much cash are you trying to get out and what is your current balance? If you are willing to stay put in your current primary for at least 6-12mos, you can do a cash out refi as a primary residence. If you purchased your new primary first, then the refi on the current primary would have to be set up as an investment property instead of owner occupied and would have lower LTV limits and higher interest rates. I would also steer clear of a Jumbo loan for the same reasons - max conventional limits vary by area ($548,250 in the Portland area for example). I do also like the HELOC because you only pay interest on the balance and you can use the available balance as it is paid down. I would only do the HELOC if you have enough income to pay down the principal balance relatively aggressively (possible velocity banking strategy?).

Sorry if that introduced more questions than answers. Without knowing more specifics, if I were in your position I would:

1) Cash out refi the primary up to the maximum conventional limits (as an owner occupied residence)

2) Stay put for minimum 6-12mos while you do the repairs and shop for the new primary residence

3) Buy a new primary residence (weigh the pros and cons of depleting your cash for a 20% down payment VS a smaller down payment with PMI, but more cash to put towards your multi-family)

4) Buy multi-family property. You would need to check with a local lender, but being an 'experienced landlord' (having a renter in your current primary), you should be able to use market rental income to offset your DTI for qualifying on the multi-family property.

Hope this helps. Good luck!

@Christopher Murphy, @Julian Colvard nailed it on the head with the appraisal gap clause. One of the major benefits to the seller with a cash buyer is that there is no appraisal necessary, so the buyer will not have to re-negotiate terms if the value comes in low (on a financed deal), let alone the added waiting time of getting the appraisal done. Also can't hurt to have your lender talk to the listing agent. Good luck getting an offer accepted!

@Steven Parker

Great question! What is your car payment and remaining balance? Even if your car loan is 0%, that payment can absolutely hammer your DTI. Also, I need to double check, but you may be able to use rental income from your room-mates. I would guess that if you could eliminate your car payment by paying it off or selling it, you would have enough room in your DTI to get a HELOC, or cash out refi. Depending on the lender, you could go up to 90% CLTV on the HELOC, or 80% LTV on the refi. The refi would have a lesser impact on your DTI than the HELOC.

Regarding the job change, your lender will want to see a 2 year history in the same line of work. Doesn't have to be the same job, but in the same field.

If I were in your position, I would tap into that equity to pay off as much of that debt as possible and reduce your DTI. Then go for the job change and get ready to make your next investment move. If you convert your current primary into a rental, you can use that as income in qualifying for your next purchase. Hope this helps. Good luck!

@Kayla Carson I hear what you're saying. The margins are definitely slim in that price point. The equity growth would be nice, though. Your cash flow would be better with a bigger down payment and no PMI, but your cash-on-cash would take a hit. I wonder if there would be any cost savings if you bought an owner occupied SFR and added an ADU? There would obviously be more work involved, but it might be an option. I'm also interested in what @Rachel Luoto had to say about the zoning change. That's not something I'm super familiar with but it would be cool to do a BRRRR SFR to multi-family conversion.

@Drake Balma do you need the rental income to qualify for the payments? Not familiar with the area, or the rules in your state, but you might be able to find better loan terms if you structured it as a second home and used it as a STR for the first year.

@Kayla Carson I'm a lender in your local market, and I know what you mean! Are you planning to keep your current primary as a rental, or sell it? Sorry if this is an over-simplification, but if you're willing to share your house, I like the idea of house hacking because you can purchase as an owner occupied vs as an investment property. That allows you to have a smaller down payment and better interest rate. Then, with your living expenses being offset by the rental income, you can save up a down payment for your next house hack. You are allowed to have up to 10 conventional mortgages, so as long as you live in the house for a year, you could continue this process until you have built up a pretty nice portfolio of cash-flowing properties. Of course there are a few more factors at play on the lending side, happy to get into some more specifics if you have any questions. 

@Account Closed, Welcome and congrats on getting started! I am a local lender, always looking to grow my network. I would love to connect!