All Forum Posts by: Charles Kennedy

@Mike Dymski I also have CIT. No reason not too pick the extra % points. I've noticed it's a little slower in depositing money  in (usually 3 days), but have yet to remove money from the saving account so not sure on that timing.

To answer OP's general question, I have roughly 35% in stocks, and the rest in a savings account (CIT). With having a plan to purchase soon, I have been leaning towards the small guaranteed return of a savings account, although if I'd put all that savings into my brokerage, I'd be crushing it, but hey, hind sight is 20-20.

Thanks everyone, this really helps. 

@Benjamin Kelly hmmm there has to be some lenders that will let you cash out or else the BRRRR method would be a myth...

@Rob Drum Unfortunately not in a position to purchase anything with all cash.

@Andrew Johnson I figured this would be the case... Thanks Andrew. Based on Matt chiming in, I think my best scenario is having a discussion with my lender on if PMI can be reduced or eliminated based on what the appraised value comes in at.

@Matt K. getting it knocked off w/ an appraisal and not having to refi out would be nice. I don't imagine I'd have much more equity above 20% so eliminating PMI is my main concern. Perhaps they may even rule it out day 1 if the appraisal comes in high enough. Discussions I'll have to have.

Thanks Matt.

@Stephanie P. Is the seasoning period typically 6 months? I've heard it can be one year, but I guess that's bank dependent

@Matt K. thanks for the input, I plan utilize a low money down loan (3.5% or 5%) , which will have PMI, so paying those closing costs again will be annoying, but ultimately should save money in the long run.

Thanks for the feedback @Roy N. and @Steve Wilmers

Hey BP,

Will any banks or CUs give a loan based on value rather than purchase price? I may be able to acquire a property below market that I plan to house-hack and was wondering they'd lend on value? That was I'm cashing out before even putting money in?

Or do I have to do a regular loan and then wait 6 months/1 year to refinance and then pull equity out?

@Joe Splitrock Yes I know it increases your return vs. if you purchased it all cash, but were not comparing all cash vs. a leveraged purchase, were comparing lending it to 13% + points. You would never come close to achieving that return without leverage, so in terms of the real estate vs lending argument I don't think bringing up leverage makes much sense.

My point is more, you will hardly find a 13% cap and then be able to use leverage to turn that into much more, you'll likely find a 8% cap and use leverage to turn it into a ~13% return. The original poster is already getting a 13% return + points, which is comparable to most real estate investments using leverage. I poorly worded my first comment, and hope this makes more sense.

@Gervon Simon Any prudent lender will require equity to be put in at closing. This so the investor has "skin in the game" and will be invested and will likely try much harder to make sure the project succeeds. So he will put his entire $21k in to close, then the hard money lender will likely put up the remaining $37k + closing costs to purchase the property. At this point the HML may either:

a) give him the remaining amount of the loan to begin construction or 

b) Allow Jorge to begin construction and will reimburse him for costs of construction as the HML approves that work has been completed. This is customary for banks to do, but not sure how it is with a HML.