All Forum Posts by: Jason Wray

When you own a piece of land the lender can provide a construction to permanent loan or a one time close.  Depending on the value or equity in your land it can be credited towards loan.  Kind of like a refinance when you refinance your home you do not bring money to closing you include the closing costs into the new loan by using the existing equity.

Taking cash out of your primary is a solid choice to reserve your liquid assets and stay cash fluid.

Armando,

I have seen a lot of success in investors pulling cash out of their homes to turn around and build on a vacant lot they own. The great thing is you get to use the equity of the lot as partial collateral so it saves you some money. One thing to keep in mind which most people never even think to do is have a Modular or Manufactured home put on the property. Manufactured and Modulars now a days are a gold mind because there is no labor or material costs.

You can pick up a Double or Triple wide 4/5 bedroom model and they are beautiful on the inside. A lot has changed in the Manufactured/Modular world and it beats paying a builder to charge you far way too much money and always take longer o complete the build.

Mike,

You have (2) options Heloc or Cash-out refinance but it’s can get tricky if you do not know how banks and underwriting works. Years ago it was smart to pull out a Heloc and use it when- ever you needed to draw from the CL. Fast forward to today now it’s not that great because you can actually take cash out through a refinance at a lower rate than a Heloc. Cash in hand is also an asset and you can purchase the home all cash.

A Heloc is nothing more than a credit card and considered a liability and "Cannot" be used as an asset or PITI/liquid reserves. Knowing this up front can make or break a new purchase during the approval process. The reason why cash out refinance may be the better choice is when you pay "All Cash" you can immediately pull 80% of the cash back out without having to wait (6) months to establish title seasoning.

I understand you may not want to have the mortgage payment but if you buy "all cash" you can put the cash back into the mortgage or into a interest bearing account to counter the rate. The whole point is to keep the cash moving and buying more properties BRRR. The whole time you are doing this you can set aside some of the cash in savings to make the payment until you need to make the next purchase.

You pull out the money, set some aside to pay the mortgage for 6 months and use the remainder to buy the house all cash for best price. Again No 6 month wait to get your cash out you pull out 80% same month and go right into another purchase to build your portfolio.

Biggest thing to remember is as you start to buy more homes the banks/lender require you to show 3-6 Months PITI in cash reserves and a HELOC will not suffice, it will hurt you since it's a DTI burden.

Fannie Mae is usually the go to for more relaxed guidelines. If you have a multifamilyyou would want to use a true Protfolio loan program. Portfolio is similar to private money where you are using the Banks private funds for their NICHE programs. Also anything that may not fit traditional guide lines or has a higher DTI.

Portfolio is 15% down for SFR and any (2-4 Unit) multifamily, Fannie Mae is 15% for SFR and 20-25% down for 2-4 Units.

Hard Money/Private can have high closing costs due to broker fees and points.  Fannie/Freddie/Portfolio usually have buy downs to rates and No ponts unless you go through a small lender or broker.

Roy,

Another thing you can do is reach out to a few local broker agents in your neighborhood. You want to speak directly to "Buyer Agents" only. Reason is buyers agents are struggling to get their FHA & VA buyers offers accepted. Reason is most are choosing Conventional offers, over ask offers, and that usually shuts down the FHA & VA buyers. So play the reverse game and reach out to several agents and let them know you will entertain any FHA & VA offer first!

Because you are a Veteran its as simple as telling the agent I want to ensure my home is known to be available to any Veteran searching for a home. I am positive there are hundreds of Veterans in your area looking to buy a home. Target your audience and bring the VA buyer to the door by reaching out to a few top agents.

As simple as telling a few agents you prefer a Veteran buyer and trust VA loans. At that point any hungry agent wanting to make a sale should dig through their leads or previous buyers with "Good News".

Andrew,

Florida has proven to be an investors paradise with cash flowing rentals. There are multiple Counties you can find a good deal and with a little TLC use the ARV to repeat the process. Which area's are you and your wife thinking about starting your search?

I am in PInellas County on the Gulf Beach side and its a huge VRBO community.  

Zackery,

You have two challenges one your bank is requiring 20% down and other banks typically have a minimum loan amount of $75K due to high cost rules.  My advice would be to get a loan secured or unsecured to buy it all cash.  You do not have to wait 6 months to get the cash back out by using delayed financing so you can pay off the first loan quicker.

If you own a home or have good credit with W2 income you can get a loan for the $70K.

Sendil,

The market is still hot in Ocala and prices are still fair on certain homes.  You might need to re-consder your real estate agent.  Are they over pricing, have you looked at comps in the area to compare.  Laslty there have been some big updates on several programs where Banks can offer more options.

Most of the time its the buyers not aware of all of the programs available currently.

Milt,

You can still do a cash out refinance on the primary and take out the cash instead of a HELOC. Cash is king and offers a better leverage position when bidding on a home or higher earnest money. Try not to focus on the rates because rates will drop back down over the next 2-3 years. At that point you can refinance down the road.

A Heloc is a debt burden, open end liability and can hurt your qualifications. As you buy more rental properties you will need to show liquid reserves for the PITI. A Heloc cannot be used as an asset or PITI reserves. You only need to take out enough for 15% down up to a 4 Unit so it looks like you have enough equity.

Omar,

I would reach out to AJ Wong he is a member on bigger pockets and a realtor.  I believe he is also finishing up a construction project down in Mexico.