All Forum Posts by: Jason Wray

Jen,

Would need a little more information but the prime rate is 8.50%. Typically the ARM products have a Ceiling which can be 5-6% added to the rate. I would find out what is the ceiling/CAP its hard to imagine 3.65% is the Max rate.

Margin + Index equals rate but what is your perodic adjustment 3/1,  5/2/5, 5/1, 5/6 etc...

Keep in mind prime rates were in the 3's and 4's a few years ago.

Jaudon,

You FHA 3.5% or Fannie Mae 5% down for any 2-4 Unit Primary home. You can also use a DPA program if you do not plan on selling or refinancing the home right away. Renters are easy to find just have to Vet them and in many cases you can find them prior to closing.

David,

Out of the areas you listed Virginia Beach or that general area would be the better choice based on cost of living. You can still get a good deal just outside of VA Beach on a Multifamily which will help gets you closer to that $4K monthly. There are some parts of Florida as well where you can still get into a great upcoming neighborhood.

California is overpriced and doomed to hit another loss in values if these rates stay high for more than 24 months. Not to mention the property taxes are insane and not worth the amounts being charged. Beautiful state but you can move to FL, TX, NC, SC, AL and still get that weather and be closer to the coast for half the price.

Patricia,

If you have lived in the home for over 10 years you should be over your final year.  Usually DPA programs have a 3-5 Year requirement before you can take cash out and not have to pay back the down payment amount.  Have you thought about doing a cash out refinance and using the money for a down payment.

Now would be a great time if you have over 10 years paid down on the home and have equity.

Chi,

You should look at a Portfolio program they offer 15% down even for 4 units and there is only 1 point on portfolio with No prepays.  Rates are around 7.75% with good credit.

A portfolio is a banks true private capital so they service the loan and offer better otpions.

Kal,

Based on what I am seeing is out of your states Virginia seems to be doing fairly well versus DC and Maryland. DC & Maryland have some chunky home prices where in VA you can still stretch your dollar a little further.

Take a look at Indiana and Ohio they have some great STR and LTR options in and around Dayton and just outside Carmel in IN.

If you are looking for a good investment friendly program I would check out a Portfolio program. It allows you to put less down with lower rate if you have good to fair credit with 15% down with No Prepays. Avoid DSCR if you can show income or at least 1 year W2 or 1099's only because the rates and down payments are higher.

Ron,

A few places that have been a hot market for investors lately would be Ohio, Indiana, Tennessee, Alabama, and certain parts of Florida. You can buy a home in Cumberland Couty TN for example spend $180K for a 3bd 2bth and have a total of $390.00 a year in property taxes. Rents in that County range form $1800-$2300 versus a $1185.00 PITI payment after a 15% down payment.

Indiana & Ohio are Hot states right now as well with a lot of low priced homes including multifamily 2-4 Units.

Dana,

The program or loan term is not an issue its a business purchase/cost, so you can write items off. You will give your CPA your Settlement statement, and your rents/expenses at the end of the year. The CPA or tax person will use multiple items to deduct typically on your Schedule E, unless you file under a different schedule.

There is a difference if you purchase under LLC or close in your own name regardless of signing a personal guarantee.

I would ask around for a seasoned CPA who handles REI and is cost efficient.

Jeff,

Have you had a chance to run the numbers on the payment HELOC versus Cash out refinance? A HELOC is usually set on a 10, 15, or 20 year term and in most cases carries a prepayment penalty. A 30 Year mortgage is over 30 years so you get the lower payment especially since HELOC rates are the same and in some cases higher than the 30YR rates.

You also have to consider a HELOC is a debt obligation and can never be used as an asset or a PITI/liquid reserve. A cash out refinance is cash in hand and can be used as an asset or PITI/Liquid reserve. Makes a huge difference in qualifications and when getting approved for a new REI mortgage.

The other thing to keep in mind is over 85% of the customers who take out a HELOC end up refinancing it in 2-3 years. You cannot take out cash if you have a heloc in 2nd place as a lien. Only reason I mention this is I have heard a lot of investors say they wish they would have never or taken out the heloc versus cash out refinance. I have also heard horror stories of when an investor took out a Heloc and the bank closed or reduced the line of credit because of a simple credit score decrease or an issue with credit.

Richard,

You have a good amount of equity in both properties and if you plan on buying more REI. I would not focus on the rates right now because they will come down in the next 12-24 months. While property values will continue to increase you will be waiting for rates to come down but values will move upwards.

The lower rates will not help if the property values continue to rise which it looks like they will continue to do in majority of states.  I would tell you to do a cash out refinance use the cash to buy more rental properties and wait to refinance for the lower rate in 12-24 months.  You might have a little less cash flow but your increasing your inventory, doors and passive income.  Play the long game and you will be happy in the end.

As you buy more properties the equity will build so at some point you will be able to pull out cash and either pay down certain loans or continue to increase your doors. Being cash fluid allows you to buy properties that need TLC so you can renovate and get out more cash on the ARV. That allows you to repay the previous loan and use whats left over to continue to buy more REI.