All Forum Posts by: Jason Wray

Collin - You do not need money to buy a home believe it or not now a days.  The state that you live in including the government offers DPA programs.  So you can buy your first primary home using down payment assistance which can also cover closing costs. There are some down falls like having to live in the home and not sell it or refinance or you have to pay it back.

Some have very short periods but its a great way to buy a home with zero down and in a couple of years or more you can refinance take out some cash and buy another home. In many cases values can shoot up and there is enough to pay off the small DPA funds and take out some cash. You also have second lien positions like HELOC or 2nd mtg. That can help you borrower and buy a rental home increase your REI.

Joey,

You have $400K so that puts you in a very strong position in terms of down payment and possible renovation funds. I would consider using a bank to alleviate your initial capital injection and focus on multifamily 2-4 unit rentals. I would also expand that to SFR's with larger lots to add an ADU or carriage home to increase cash flow. You only need 15% as a down payment so spread your $400K wisely and blanket those funds over 5-6 properties.

Focus in states where the STR/LTR rents are high and property values will continue to grow like Florida, Nevada, Arizona, Texas, Tennessee, North & South Carolina. California residents are migrating out of CA and into NV, AZ, TX and FL. The South East is growing as residents are moving out of the North East and coming down. Florida is a sure win due to the property values and great VRBO/AIRBNB options.

You are cash fluid right now so if you can focus on the "Ugly Inventory" it will allow you to land better deals. As long as the property can pass an appraisal and not be "Subject to". You can get into several properties where part of that $400K can go into renovations. Once your done with renovations, refinance on the New ARV and pull out your initial capital.

I would focus on multifamily first so that the property has a higher cash flow potential.  Additional doors also lowers your potential vacancy ratios.

Josie,

Best approach would be to do a cash out refinance while the home is still your primary so that you can get the lower 30 year fixed rate. When the renovations are completed then you can refinance it on the new ARV and convert to a rental after you get your initial capital back out. Rates are higher but a hard money loan is going to leave you with (2) things. A high rate of over 12-15% and a second lien on your property that you will more than likely consolidate down the road with a refinance.

You would be surprised if you calculate the cash out refinance new rate and payment versus the hard money loan or HELOC. You will see in many cases that the cash out refinance even at a higher rate still offers a lower payment then taking out a hard money/Heloc.

You might lose the 4% and end up with a 6.875%-7.25% but it calculates out lower than a 12-15% Hard money loan.  Mortgage rates are higher right now but they will eventually go back down allowing you to take out the cash and refinance down the road for a lower rate.

 Ashley,

I am here in Hillsborough and would love the opportunity to talk about the options.  I have a team as well and understand the importance of ensuring value and transparency for buyers.

Eric,

I would reach out to Beau Matlock he runs The Matlock Group in Indy all around Carmel and surrounding. I send him most of my buyers who have questions about STR/LTR on both SFR and MF's. We have been crushing it lately in that area and the ARV in some places is just crazy!

Paul,

If your current primary has equity it might make sense to take out some cash through a refinance. You can use that cash to put down a little more to avoid a higher payment on the next primary. You can always elect to do a 80/10/5 so that you can avoid PMI and keep the first loan at 80% LTV. The other option would be to buy a Multi-family so that the other doors offset the monthly debt burden.

There are other things that can be done like getting a seller contribution towards closing costs and using that to do a "Rate Buy-Down".  Rates are a a bit higher now but a rate can always be bought down to lower the rate & payment.  Best thing to do is talk to a Banker/Loan officer and work out the numbers in advance before you make a move.

That way you have a game plan and goals set for a target monthly payment and an attack plan for the purchase. You can dial in the property type, loan amount, PMI or No PMI, Rate buy down, seller concession/contribution. Then you have your Banker and Buyer Agent jump on a call so they are all on the same page.

There is always a way to get a new deal done you just have to break it all down and calculate in advance.  Preventive maintenance is the best practice when it comes to getting it all done right!

Cole,

The only way your wife can put 5% down is if you both buy this home as a new primary.  If not it would be an investment home which requires 15% down.  If you can rent out your current home it would allow you to buy a new home.  Just treat your current home as a rental and find a new home to purchase so you can use the 5% down option.

You may also want to rethink a cash out refinance even with a 2.5% rate.  Rates will come back down but property values are inflated right now.  I would not wait to pull out cash because that cash will purchase cash flowing rentals.  Take advantage of the cash now and refinance for a lower rate in 12-24 months.

Reach out to Anthony "AJ" Wong  he is a bigger pockets member as well. 

Eugene,

Your intuition is on pint because multifamily is the way to go more doors equal more passive income. You can also use the other doors rent per month to add to your income to qualify for a larger loan amount. If you do not own a primary FHA is a great stepping stone since its only 3.5% down on any 2-4 Unit Multifamily. Thats a great start to jump into a MF right out of the gate so that you increase your passive income and exit an income generating property the next year.

That increased income from your taxe/schedule E  allows you to afford more rentals each year climbing up using the income and the equity of the previous properties.  If You already own a home you can still get into a 2-4 Unit with 15% down.  Focusing on a duplex or any multifamily is the way to go for best results.

Anything above 4 Units is commercial and does not fall under the primary owner occupancy guide lines.  You can always buy it as a investment and tap into any equity you have for the down payment from another home.  Unless you have a friend or another investor who wants to split the down payment you can have more than one person on the loan to qualify and split assets.