All Forum Posts by: Hali Snyder

Quote from @Nicholas L.:

@Hali Snyder

if you'll indulge the question, are you buying these deals on the MLS? i'm skeptical that, at current rates and with HELOC debt, even temporary, they will cash flow at all.  

again, just trying to help you think through this.

Up to this point I have been, I just haven't found another avenue to source deals outside of that. The York, Harrisburg, Hanover, Lancaster area is dominated by two separate well known and liked generally real estate investors so finding off market properties that haven't already been contacted by them is few and far between. If I'm totally missing something though, the advice would be much appreciated. 

Quote from @Nicholas L.:

@Hali Snyder

I know this wasn't your question, but if you use HELOC money for a down payment + some other type of loan for the rest, you're probably just going to lose money, as the rental income won't be able to service all of that debt.

You mentioned "paying off the HELOC as quickly as possible" ... what kind of timeframe are you thinking about? The rental income likely won't be able to do that, you'll need cash from somewhere else.

Hope that helps you think through this

 The timeframe of paying off the heloc as quickly as possible is of course really dependent on the amount that I pull. As of right now, the way the math boils down with conservative estimates based on current cash flow on the 2 duplexes and my income, $7-8k per month would be put back into paying off the heloc once the amount of units that I'd like to be at is hit. The first two are cash flowing about $1,550 total at the moment, which I realize isn't going to be the average for every deal. But slightly higher mortgages and more conservative estimates on rents still puts me in a position where I'm cash flowing on new ones while also factoring in the payment on the heloc, at least up to $80k. 

I hesitated for the past year on taking out the heloc in general as I really had no desire to go further in debt to scale but the overall consensus that I've gotten any time I've mentioned slow grow vs biting the bullet and then paying it off in talks with local investors was that I was afraid of the debt for the wrong reasons? 

Quote from @Jonathan Greene:

Why are you focused on scaling when the only way you can scale is to take a second loan on your primary and burn all of your equity that you may need for something else (even if you are a high earner)?

Most people who talk about scaling now, when they only have a couple of properties, are watching too much content and not making enough contacts. What's the rush?

Any time you take a HELOC, you should only use 50 percent of what is available to you so you don't end up in a shortfall.

 The focus on scaling at the moment is solely being driven by the desire to leave the industry that I'm currently in within the next 3-5 years and wanting to have the groundwork done so that my focus after this can be something that I actually enjoy again that isn't as mentally taxing. Rather than bumping into an issue after making that jump where lack of time in the current job may be an issue, it seemed to make more sense to have this part tackled ahead of time rather than taking years longer to do the exact same thing, then just paying the heloc off and doubling down on paying off the properties entirely once the heloc is paid. Obtaining the properties wont be rushed to a point where they're not the "right" ones and not cash flowing even after factoring in payment on the heloc, but I'd like to have access to the funds needed if/when something pops up that's perfect rather than being in a position where I would in theory have it in a few weeks, months, etc. 

In regards to the 50% of availability, are you referring to 50% of the total equity or 50% of the max on the heloc regardless of which amount it's taken out for?

Good morning everyone!

Long story short I'm finally taking the jump into scaling more rapidly. I currently have 2 duplexes, but in the process of taking out a heloc on my primary residence.  The current goal with this is, pull the equity and put it towards down payment for purchasing a total of 6 more units (whether that's 3 duplexes, 1 quad and 1 duplex, etc.). Appraisal is done and came back lower than expected at $286,000, the terms of the heloc are 7.5% up to 80% ltv or 9% up to 100%, 10 year draw 20 year repayment but the intention would be to pay off the heloc as quickly as possible so that realistically isn't even part of the consideration between under 80% or over. 

The dilemma that I'm running in to is sticking to the lower rate allows me to pull a tad over $62k vs up to 100% would allow me to pull a max of $116k roughly. Do I take the higher amount and rate in order to scale quicker or do I limit it to the lower amount and lower rate? I know opinions are going to differ, I just feel stuck between the two decisions and some outside insight from those that have already utilized a heloc for the came thing would be helpful. Thank you!!

Thank you!!

1. Yes, currently living there. So we would essentially need to move all of our belongings out and then back in a year later.

2. Yes, the baseboards work. One bedroom (the master) and the upstairs bathroom, have no heat whatsoever though so space heaters have been used for them in the past. The only hang up that I have with dropping that amount on mini splits is it pushes back the timeline of the 4 unit because that chunk of money would be pulled out of that account.

3. The paying off debt sooner rather than later part is essentially just being done to give us financial freedom and the ability to leave our jobs quicker. Neither one of us wants to retire this early, just the ability to find something we both really downright love and if that means taking a pay cut we want the means to be able to do that and not have it affect our lives too much. 

4. It’s hard to really look that far into the future financially with something like that but my gut is telling me based on the other plans that we likely won’t need those funds. It would more or less just be more money down or something in a reserves account/invested in a something with a high dividend yield (that’s more up his alley than mine).

5. Between the two of us we’d technically be able to add at least one duplex a year while at our current jobs and not sacrifice too much. It’s just a matter of how long we’re willing to stick it out after 6 and 8 years because the highs and lows of the market wear on you something fierce and how quickly we can drop the stress of that by investing as strategically as possible without overextending ourselves. 

A little background to start out because I'm feeling a little scatterbrained with the directions to take next: I'm 23 and currently own 2 duplexes with gross income just shy of $4k per month, net after mortgages, taxes, utilities, repairs, etc. is about $2,125 give or take depending on the month. I purchased my childhood home from my father for about $100k less than market last June and the original plan was to hold for 2 years which takes me to June 2025, do minimal renovations, then sell and take the profit from the sale and purchase one or two more investment properties. The current thought is purchase a 4 unit in the spring as a primary home and live in it for a year while renting out my childhood home and purchasing another duplex in the fall to put me at 10 doors, then move back into my house at the end of the year lease and after a year in the 4 unit, whichever comes last. Mortgage on my current home (4 bed, 1.5 bath, on roughly an acre, in a quiet neighborhood) is $1445 and the idea would be to rent it out for $2000ish plus all utilities depending on the rental market this time next year but currently that's pretty close to where it would be. 

Now for the questions:

1. Is it a bad idea to rent out my childhood home for the time being? If so, why?

2. Currently the heat/ac situation is electric baseboard heat and window ac units that my realtor is insistent should be taken out and I should have mini splits or a furnace added instead. The least expensive quote I've received is $7,200 for 2 mini splits. Does this actually make sense both from a selling standpoint down the line and a renting standpoint short term?

3. Knowing my end goal is to move to another state (Sperryville or Staunton, VA) and 3-4ish hours away to start a small hobby farm, does it make sense to pay off these properties rapidly in the next 5-6 years so that I have a total clean slate from a lending perspective in order to finance the land, house, and buildings, or does it not matter?

4. When we hit the point of moving out of state, does it make any sense to actually keep our current home vs selling and using the funds towards the farm?

5. Currently, I don't have any second mortgages or helocs because the idea of keeping track of more than one mortgage per property has been a tad daunting and decreasing my cash flow at the moment is something I'm battling mentally with. Between the duplexes, there's roughly $160k in equity and then our primary is about $110k. Do I take out a line of credit on our primary or one of the duplexes to expedite the 4 unit purchase or just leave them alone?

I'm not looking to scale tremendously, just looking to have enough passive income once the rental properties are paid off that my fiance and I can leave our jobs in the automotive business and find something less stressful and more fulfilling, live a little slower, and travel more. With 4 fully paid off properties and 10 doors producing $10kish per month in the next 5-6 years, I think that achieves what we're looking for. If anyone has a different opinion or insight on this that I'm missing please feel free to mention it!