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All Forum Posts by: Jason Wray

Jason Wray has started 22 posts and replied 2351 times.

Post: Out of state investing

Jason Wray
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Keith,

Greensboro is a nice area but I would tell you to also look into Fayettville, NC there are some great purchase price options for several duplex and Multifamily rentals. Multifamily is the way to go but since you live in NJ you also have the option of buying a single family as a vacation home. Great thing about vacation homes is that they only require 10% down and can be used as a STR.

Multifamily ony require 15% down plus you get to use the current common rents as income at 75% of the monthly.  That allows you to finance a little bit more of a loan when you can use the other rents per month.  You are correct though NJ is not the most investor friendly state to start in becuase of the prices, and taxes are cruel.

NC taxes are half of that of NJ but do not forget about states like TN, AL, FL, OH and IN they also offer great price points with much lower taxes.  Tennessee for example just outside Knoxville you can find annual taxes on a 3 bed/2 bath on 2 acres for $750.00 annually!

Post: HELOC or REFINANCE

Jason Wray
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David,

It depends on the amount being borrowed and the use of the funds. If you are doing a small renovation project or repairs under $20K a Heloc may be the best option. Primary residence cash out refinance is the better choice for a down payment on another property or a larger project. The reason is when you apply for a mortgage on another property a Heloc is a debt burden and hurts your DTI and chances of getting an approval. A heloc cannot be used as an asset even if funds are drawn prior as PITI reserves.

Cash out is liquid reserves and it "Can" be used as an asset especially for PITI reserves required by the lender. Banks/Lenders generally require 3-6 months of PITI reserves to buy another property and in some cases for each property owned. Cash in your account cannot be touched or reduced but a Heloc can be altered. At any time a Bank/Lender can close or reduce your Heloc credit line due to any change. That change can be a late payment even if not your fault, new credit cards or mortgages causing the DTI or credit score to drop, and every month they soft pull to monitor the risks.

I have even seen cases where in the middle of a project a lender closed a customer's heloc due to them buying a new car and it dropped their credit score and increase their DTI. When you are in the middle of renovations or trying to close on a home and being at the mercy of the Heloc lender closing or reducing a line of credit can be tough. This is not a scare tactic its just a preventive conversation as an example.

You have to also take into consideration that a cash out refinance is going to be on a 30 Year amortization giving you a lower payment. Most Heloc rates now are either matched or higher than a 30 year rate. Helocs are generally on a 10 or 20 year amortization and if they are on an interest only it creates bad habits and keeps you comfortable paying the interest instead of the principal and interest for a quicker pay off/down. Most people who take out a Heloc refinance regardless in 3-5 years to consolidate so its better to avoid the second set of costs adn just go cash out refi.

Post: FHA House hacking risks?

Jason Wray
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Armando,

The best way to avoid issues is to buy a Multifamily (2-4 Unit) as your primmary with 3.5% down. Then in 6 months refinance into a conventional loan and you can exit the property legally. There are certain factors that need to be met like LTV. If you focus on a fixer upper you can renovate in 6 months and refinance on the ARV.

You only need to be at a 85% LTV to refinance and its not hard to build 15% equity in a property in this market enviroment. There are a few other options as well that can be taken to escape the FHA to Conv. 12 month rule.

Post: Starting my investment journey

Jason Wray
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@Stephen VanMeter

Brandon I tagged Stephen Vanmeter in this post he is another investor who has a similar investor style.  He may want to discuss a partnership with those parameters.

Post: First time home buyer here. How do I find the right location for my first property?

Jason Wray
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Marco-Dane

I would tell you to focus in your area Fayetteville has some decently priced multifamily homes. You can pick up a Duplex in your area for $250K and under. If you focus on a Multifamily you can get into a property with as little as 3.5% down. You save on the downpayment and can refinance in 6-12 months into a conventional loan. You can also focus on a MF that needs some TLC and not so much turn key. That way you can fix it up and on the refinance pull out some cash on the new ARV to use as a down payment on the next home.

The best thing about starting with a MF is your getting the cash flow and passive income right out of the gate.  

Post: Should I Use My Primary Home Equity for the First BRRRR Project?

Jason Wray
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Stephanie,

If you are going to buy another home avoid a heloc they are a DTI burden. The underwriter will hit you for the full payment of the heloc even if you do not have it used. It's looked at as a debt obligation where a "Cash out" refinance is cash in hand and can be used as an asset. Cash out refinance can alos help the next purchase by showing liquid reserves that are required for PITI reserves.

You also have the peace of mind of not having the bank holding the Heloc closing or reducing the Heloc because something changes.  That could be a change in your credit score, additional liabilities, higher credit card balances, or late payment.  The bank can also close or reduce Heloc balance if they are going through a hardship or having financial issues.  Normally that would not be likely but banks are struggling right now to stay a float with tighter asset and financial requirements.

Cash is king and having cash in hand and not in the form of a second lien position or excessive tradelines as a debt goes a long way in your underwriting approval.

You are right, now is the time to borrow against a primary and buy more real estate.  Rates might be high right now but they will be back down come end of 2024.  Then you simply refinance and lower the rate allowing for more cash flow.

Post: Fellow Investors, do you know of any Sharia Compliant Lenders?

Jason Wray
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R. Ali,

This is new to me as a Banker but may I ask why you might not want to entertain an FDIC Banks offer? Would it be better rates and terms or is it more of a shared partnership and share in equity.

Post: DSCR Loans Purchase, Refinance, Cash out

Jason Wray
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I wanted to offer Bigger Pockets members access to our DSCR financing. We cover Single Family, Multifamily up to 8 units and parcels with more than one rental property. You can close in an LLC and we have great options including Interest Only and 40 Year loan options wiht ARM products. This DSCR program is for purchases, Cash out refinances, and regular refinance out of HML- Hard Money loans.

We also offer 15% down on 2-4 Unit properties under our TFSB Portfolio program.  Reach out to me via email/online or conact me through the messages.

Post: Lake front properties and idk what to do

Jason Wray
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Thomas,

Just buy one as a vacation home where you only need 10% Down.  Tell the seller since he is into creative financing that you will buy all 3 but split into 3 contracts.  In the mean time just have him sell you the one as a vaction home so he gets full cash.  The other two properties have him do a contract as a seller held note on the other two homes. You can agree to purchase the next one within the next 6 months and the 3rd 6 months after the second.

If you play your cards right you can pull some equity out of the first vaction home after some renovations on the new ARV. On a vacation home you can take up to 90% CLTV which could allow you to use that cash as a down payment on the second. That can be done in as little as (6) months title seasoning and some renovations. The 3rd if you STR each of them you should have accumulated enough cash flow in 12 months to put 15% down on the 3rd as an investment.

Post: refinance a property after recently listed

Jason Wray
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Mike,

You should not have an issue with the property being recently listed unless your using a smaller bank or CU that has excessive overlays. The appraisal should be ordered through an approved AMC company and value should only be based on market analysis and current comaprabale sales. If the property is listed the lender will require you remove it from the MLS unless your doing a 'Bridge loan".