All Forum Posts by: Jason Wray

Cash out refinance is going to give more options and remove the liability and higher debt ratios a HELOC carries. Cash is liquid reserves and can be used for more aggressive earnest money or all cash purchase. Cash out can also be used as PITI reserves required by lenders when buying more REI. HELOCS cannot be used as an asset because they are an open end mortgage like a credit card aka - liability!

Always go with which ever home has the highest LTV and if they are tied use the second home. If that payment becomes a burden then turn that second home into a rental and use the cash flow to offset the payment from cash out.

Zackarias,

I would stick with an FDIC bank that has little to "No overlays". Nothing against mortgage brokers but I left that world years ago because of most of the delays in closings, problems with underwriting, and Non prime rates. Not to mention having to pay broker fee's and points. Communication is key to closing a loan on time and ensuring you have discussed all aspects of your personal documents and history to avoid surprises/denials.

Preventive maintenance is very important for a good banker/broker/loan officer to again avoid issue in processing or worse case underwriting.  Your banker or broker should be available Mon-Sunday and not just from 9AM to 5:30PM banker hours.  Questions need answers even on the weekends and realtors need communication with the bank/lender to do their job and be able to close on time with 3rd parties.  Your banker/broker/loan officer should be an asset and you should build a long term relationship with them so that they can provide you with back to back investment financing.

Knowing you and your finances is important and by not bouncing around and having a go to bank/lender that offers all programs both traditional and Non/QM-Portfolio is a good key to success. Look for banks/lenders that offer better guide lines like higher LTV cash out options, less money down for multi-family, Non/QM options DSCR, Self Employed loans, Bank statement loans, Asset lending, No ratio, Non-warrantable Condo's, Condo-tels, Mixed use. Its a clear view that the bank/lender has a larger capacity to fund loans on more than just traditional loans.

Mandy,

Take advantage of the lower down payment options you have as a primary home buyer.  Live in the house for a short period of time and flip it over to a rental.  You can go conventional and put between 3-5% down save your money for renovations or TLC curb appeal upgrades and Refinance to take out some cash -Rent & Repeat!

Allen,

Even when a mortgage is paid off free and clear you can still do a cash out refinance. The other option would be to do a HELOC home equity line of credit - which is just like a credit card. Cash out in most cases provides more opportunities with less risks. It lso offer you cash in hand as reserves (PITI reserves) where a HELOC cannot be used for reserves or as an Asset like liquid reserves -cash.

Jon,

I woud not sell I would do a cash out refinance and pull out enough to purchase another property.  Find one that needs some TLC and do some minor touch up work and keep the cash flow going on your second rental.  Build that portfolio because regardless of the market up/down cash flow is key.  Look at the long term goals or holding onto the property and having it free and clear one day adding to your retirement.  Also it would be another property down the road you can utilize its equity to take out some cash and repeat the process!

Matt,

FHA and Conventional both have a home renovation loan. FHA has a 203K loan and Fannie Mae and Freddie Mac both have a home renovation loan. You can also include the purchase of the land lot into these loans for a new construction. Since inventory is low a lot of people have started buying land lots with the option to build a SFR, Mobile Home, Modular etc. Price is a lot better then buying at hyper inflated prices!

Paul,

If your going to buy an investment home you need a 620 or better.  Primary you can get away with being as low as 580.  These are the middle scores used between the three bureaus.  There are programs that can use the high score of the bread winner (spouse who makes the most money).

First off I would ask if there are other unit in this condo association selling for more than what you paid? If not doing $15K in renovations may not help you with the value. When you buy a condo and do renovations its not the same as buying a detached property like a SFR or multi-family. The appraiser is only going to give you value based on the other units selling in the association. So if there are higher sales but they are for larger condos in GLA/SQFT & Bed/Bath count, renovations will not increase value. Just make sure you are looking at apples to apples in terms of what you put in and what you get out.

Right now you have no equity in the property and if you put more cash what is the new ARV? You might want to wait the 6 months title seasoning and see if you can convert over to a conventional loan to use FHA again before sinking in another $15K in personal credit card debt. There is no equity to borrower at 96.5% LTV so you would be looking at unsecured lines of credit if you have over a 740 Fico and steady W2 income its possible. The other issue is if you do not convert over to conventional your in violation of the FHA 12 month occupancy rule....

Check it out good news for LTR/STR/AIRBNB investors who own real estate especially in Florida. The Vinoy Hotel in Downtown St. Petersburg has hit an all time record standard room $1000.00 a night! Other Hotels and STR's are booked through the year with small openings based on fall out only. I am excited about this because in my area and Nationwide this opens up more confidence in the purchase market. Don't be afraid of the rising rates that are due to the Feds attempt to slow down the hyperinflation! Cash flow is key and this is a little foreshadowing to give us REI some insight to the future.

Lending is also opening up its guide lines with Non-QM loans being offered since 2022. Lower down payment for Multi-family homes on DSCR programs, Bank statement programs for both new investors and help for self employed borrowers with less then 1 year 1099. That's right less than (1 year) not 2 years with these new Non/QM loans and DTI is getting stretched to a big 50% on back ends. That is a huge amount of wiggle room on some of the new loan programs being offered for investors.

Please note I am not advertising I am sharing some exciting news! 

Stanton,

I am in the St.Peterburg area closer to the Gulf Beaches. St.Pete is great and there a lot of places to have an STR for example Downtown St.pete is now alive and jumping! New Waterfront Pier, New Restaurants, New Cafe's, Close to the St.Pete Clearwater busines district and airport! You would be surprised at how busy the STR's are in this area or in Pinellas County in general. You also have Seminole, Largo and Clearwater all within minutes of the Gulf Beaches and are all dynamite STR/LTR opportunities.

There are so many great deals here on a daily basis just need to have some good connections.  Lean on me if you want to Network!