All Forum Posts by: Grant Berthold

This video explains the tax repercussions of using leverage in a SDIRA https://www.youtube.com/watch?v=lJehr-VXXlc

Thanks for all the replies! So the similarities I'm seeing in these posts is that it's advantageous to have a relationship with a lender for business/commercial/construction loans, but for conventional financing it's best to shop around. Situations can change but that's the general idea. Does that seem like a correct assessment?

I'm looking to purchase a property and I've trying to figure out what's the best course of action in regards to lending. I've heard advice from both sides - Some people I've talked to say that you should always shop around to get the best rates. Every lender is different and therefore by looking around you can find best product for your situation. Others I've talked to say that instead of shopping around it's best to stay with one lender and build a relationship. Over time the relationship and trust will grow, borrowing will become easier and eventually they'll be asking you if they can lend you more money!

I don't know who's right and I'm hoping to glean some wisdom from the biggerpockets community on this one. Thank you!

You could buy another multi-family property with an FHA loan. Would only require 3.5% down.

Also,  I'm about to purchase my primary residence (single family) with a conventional loan, and my lender isn't requiring me to have reserves for my other properties (I still plan to for wisdom's sake). Not sure if this is just on a lender by lender basis, but I would call a few local lenders and see what they can do for you.

Are the numbers you have listed your actual numbers? Only reason I ask is because your Insurance number seems really high. On a 90-100K property in my area, I would be paying about $40/mon for insurance, possibly less.

My assumption is that you're looking at properties around $90-100K with 20% down because of the $350 you have listed for mortgage. If my assumption is wrong then never mind. 

Thank you all for you responses! I'm around 75% LTV currently, so I don't think it would be worth it for a cash out refi at 85%. I have not considered a HELOC, but that does interest me now. Would I be able to get a HELOC if I haven't paid down much principal? The majority of my equity has come from appreciation/upgrades as I had a low down payment.

I'm considering doing a cash out refi on my personal residence, and I'm wondering what the highest loan to value banks allow. Also, would a new appraisal be done? My market has seen decent appreciation recently, and I've done quite a few upgrades on the home. Has anyone had any experience with this recently?

Thanks!

Grant

You would be fine renting out the other two rooms. It would be the same as if you bought a home and 2 of your friends became your roommates and they paid you rent. However, I believe you would need to include the income from the 2 other renters as income on your taxes (I would check with a cpa on that to be sure though).

Along with that, if you are planning on buying a single family home, I would use a conventional 5% down loan instead of an FHA loan. The Mortgage Insurance will be lower, and you won't have to pay what's called the "Up Front Mortgage Insurance Premium" which I believe is 1.75% of the loan amount.

If you are planning on buying more properties in the future, you could use an FHA mortgage to buy a multifamily property (up to a 4-plex) and still only put 3.5% down. You can only have one FHA loan open at a time, so if you think you'll buy more properties, I'd "save" your FHA loan and buy this single family with a conventional loan.

My wife and I studied the local market for about 6 months before purchasing our first property. I'm glad we didn't wait any longer than we did: I think the temptation for "analysis paralysis" would have gotten too strong if we kept looking. At some point you need to pull the trigger. Even as we were negotiating, I kept thinking "Are we making the right choice??", "Should we pull out and wait for something better??". But after multiple mistakes and probably fixing up the property too much, we now have a property that cashflows about $400/mon after all expenses.  So as long as you've done your research and there's wiggle room in the cash flow, I'd say go for it. Doing an actual deal taught me a 100x more than I learned from reading books, listening to podcasts, etc... Good luck!! :) 

Hi Doug! 

For me, it was READ, READ, READ whether online (BP) or books. Not everyone likes to read, but it was essential to me starting, and more importantly, to not give up when the going got rough. I actually didn't find a mentor until about a year after I bought my first property. Once I got into the real estate world, it was amazing how many investors I met, and I found one very successful one that I can always call and ask for advice. 

For flipping - these books are extremely helpful, probably the best and most thorough books I've read: 

http://get.biggerpockets.com/flippingbook/