All Forum Posts by: Jack Rozema

Looking at going under contract on a 10-unit portfolio. It’s 3 different properties: duplex, triplex, and 5-unit. Ideally I want to do some sort of bridge/fix and flip option for renovations and then refi around 2.5/3 years once increased rents are stabilized.

What can I expect for closing costs for both types of financing? Or if it “depends” too much, depends on what? What are steps to ensure you don’t overpay other than shopping lenders?

@John Clark that's a good idea that I hadn't thought of. I'm not crazy about using those funds to simply pay off existing debt instead of investing in other income producing assets. This house is still my primary residence so I don't have cash flow yet. My interest rates on the vehicles and loans are pretty low, so I don't think it makes the most sense. Yes it drops my DTI and makes me more qualified, but then I have no funds to put that qualification to use. Right? I'm honestly asking, I haven't really looked into that a ton.

@Tim Delaney that's pretty much exactly what I was thinking. I figured that using the HELOC would affect my credit score even more, and I don't like the idea of adding another payment in addition to my mortgage, even if it is interest only.

@David Kelly thanks David! My CC has 10k on it. So similar to what Kevin was saying above, I can tell the lender I want to immediately pay off that credit card with the cash out funds (which I absolutely do) and it shouldn’t hurt me for qualification?

While a HELOC has benefits such as a higher LTV, I think I want to keep the house long term as a rental so I'm leaning more towards cash out refi at a fixed rate, not subject to fluctuations that a HELOC is.

@Kevin Romines thanks Kevin! Very helpful.

I actually prepaid all the PMI at closing. It made my closing a few more thousand dollars, but that's part of what kept me qualified overall. So my mortgage payment is strictly principal and interest with no PMI right now.

And I never knew that you could do that sort of pledging at closing, that you'll list a debt to be paid off with the HELOC funds. That's good to know. Can you explain the "add 2%" thing again? Not sure I'm following 100% there.

@Andrew Freed thanks for the feedback Andrew! I do like the HELOC idea because of the easier qualification and it feels less permanent. I'd be interested in something like a 90% LTV HELOC, which in this case I could perhaps pull out up to 50k and use it to BRRRR another local property and then pay off the HELOC and hopefully some other debt too. What do you think about that?

@Matthew Crivelli what’s the typical interest rate range? That’s a main reason why I posted, that I unintentionally left out of the post. The high credit card balance is hurting my credit score right now, that’s why I’m exploring options.

I want to see if anyone has an opinion on what I should do. Quick background:

Bought our house May 2020 for $185k, 6 bed 2 bath, near Kansas State. Put about $12-15k into it. Remodeled kitchen, both bathrooms, painted the entire interior, remodeled basement bedroom that's doing well as an AirBnb. Did all the cosmetic work myself to keep costs low. Goal is basically a "live-in flip" and to either cash out refi or HELOC to get the snowball going on other investment properties.

Current conventional mortgage is 3.75%, total payment of $1,212, current balance is just over $178k. House next door just sold for $260k. I think our house is very similar post reno, and ours has a detached garage but the neighbor does not. Really the only thing ours needs is a water heater which I’m replacing soon for ~$1,500. So I’m thinking it should appraise for at least $250-255k.

Main issue is I'm nervous about the qualification for the new loan. My DTI was almost too high to close initially (student loans and car payments) and now I have ~$10k left on a credit card from the materials (no interest until Sep 2021). I do make ~$90k in my W2, about 10% more than when I applied last year for the loan.

Should I just try to apply for a refinance with a few lenders as is? Should I ask a family friend to loan me $10k to pay off the credit card first and I pay them back with interest in a few months with the cash out proceeds if it saves me interest in the long run? Will a lender flag that deposit during the underwriting process and be concerned? Should I HELOC instead? Any ideas are appreciated.

@Brian Adams thanks Brian, makes sense. On a side note, do you ever use an expected/target cash on cash for large multifamily and if so what do you look for?

I’m looking to propose a deal to some investors I know. There are two properties I’m looking at specifically, one is a 102 unit complex, the other a 224 unit. I have the basic financials and rent roll from the agent, but i haven’t seen an asking price yet. However, I can estimate what they’re worth based on the real estate taxes paid over the last year. Going to tour the properties next week.

Given those estimates, what should I expect when looking to get financing for these?

15-25% down payment?

15 or 30 year terms?

Interest rate?

I know it’s a lot of “it depends,” so what factors should I focus on that will determine these things?

Any recommendations for where to go for this financing? Specific lenders? Hard money?