All Forum Posts by: Jared Bouzek

@Chris Lawrence With a conventional refinance, you can roll closing costs into the loan amount as long as you meet the LTV guidelines. In your case with a duplex, if you're not pulling any cash out you can finance the closing costs into the loan up to 75% LTV. That is why we call this type of refinance a "limited cash-out" refinance. You're allowed to roll in the closing costs but cannot take any additional cash out.

Because a cash-out refinance for multifamily is limited to 70% LTV, you likely won't be able to take any cash out given the value and current loan amount you listed.

@Max Allendorf I think you would be much better off having the conversation with a hard money lender to get a sense of what they offer and so they get an idea how much cash you're bringing into the deal and what your expectations are. I see a lot of people miss deals because they find the property but have done no due diligence on their financing, so they scramble to put their financing together and they lose out on a great opportunity. It's especially true in our market where things move very quickly.

A private lender is typically going to be somebody you have a relationship with such as a friend or family member who has lots of cash available, but they're not investing it effectively. You're likely to get better terms with a private lender because you know them personally than hard money.

@Darryl Lim Welcome to Bigger Pockets. It's impressive to see your drive at your age. Learn as much as you can through these forums and don't let anybody hold you back. I think you're going to find that your age group will be very small on these forums and in REI in general, but getting started now with the learning process will put you light years ahead of 99% of other high school graduates. Use the search function in these forums to look up specific topics. You might also try the Ultimate Beginner's Guide if you're looking for a starting point.

Max Allendorf If your interest is flipping, you will probably be looking at either hard money or private money lending. They are designed for short term use and don't have the property condition requirements associated with conventional lending. If you're looking more towards buy and hold investing, I would maximize the use of conventional lending for as long as possible before you go another direction.

@John Y. Fannie Mae just recently raised DTI limits to 50% of your gross monthly income. The key is making sure you're dealing with a loan officer who is calculating your DTI correctly because there are a number of different ways you handle rental properties depending on the scenario.

Ideally you want to stick to conventional financing for as long as you can because that is where you will find your lowest rates and best terms. Once you've maxed out your 10 Conventional loans, you can switch to commercial and deal with the terms because you have no other options.

@Logan Turner This is somewhat of a quirk in conventional underwriting guidelines, but I do know of a lender who will do a conventional Fannie Mae backed loan in this scenario if you are the 100% owner of the LLC and you quit claim the property into your personal name. They will allow you to cash-out under these circumstances with no seasoning. I have never run across another lender who will do this, because 99% of lenders interpret the guidelines to say you must season for 6 months. I know they will do it because I closed a loan about 2 months ago with this exact scenario here in Colorado and I'm about to do another one. Perks of being a broker. ;)

I'm not licensed in CA, but I may be able to hunt down a broker connected with this lender who will do the loan for you. Can't guarantee anything, but shoot me a pm if you want me to do some research for you.

@Max Allendorf Welcome to Bigger Pockets.

The 1% rule is a "rule-of-thumb" that says your gross monthly rents should be at least 1% of the purchase price. So if you're purchasing a $300,000 house, gross monthly rents should be $3,000 to make it a worthwhile investment.

You will see a lot of variation in this "rule-of-thumb" across Bigger Pockets mainly because it's not a very good rule, and it means entirely different things depending on which market you're in, but people still try to apply the rule across the board to all markets. Some markets in the Midwest people view the 1% rule as a terrible investment and they will only invest in 2% properties. You will be hard pressed to find a legitimate 1% property in Denver without the capability to locate off-market properties with a highly motivated seller and you're likely to do some rehab. It sounds like you have some construction experience, so you have somewhat of a competitive advantage to make sense of those properties.

Long story short, regardless of what rule your aiming at, those rules are simply a guideline. Learn how to do the analysis on properties to determine what makes a good investment. If you do come across a 1% deal in Denver, you will want to know what the risk factors are going into it that make it a 1% property because that simply isn't our market right now for properties that are in decent shape.

If you're interested in flipping, go buy J. Scott's book on flipping. That will be a good starting point for you.

@Dana Richardson It helps to start be defining what your goals are with real estate investing. Different strategies will accomplish different things. Even implementing the same strategy in different locations will produce entirely different results. Are you looking for immediate cash flow? Are you trying to build a portfolio for long-term wealth? Once you have your goals nailed down, it's easier to put together a game plan on how to get there. Start with the end in mind.

Hi @Account Closed. I didn't really see a direct question in your post. What you're suggesting is definitely doable if you go about it the right way. Whether you choose to do a HELOC or a cash-out refinance on your condo is partly personal preference and partly strategy. You will want to be clear with your loan officer on what you are doing, so that you're taking everything into account in your DTI and they should be able to walk you through the pros/cons of HELOC vs cash-out refi. You do have access to HomeReady (3% down) if you meet income limits, but you cannot use Home Possible because you already own property. You didn't say where you're specifically looking to buy, but I suggest you connect with a loan officer licensed in the state you're looking to buy in who will do the low down payment options for you.

Let me know if I can answer any questions for you.

@Rich Dunne Welcome to Bigger Pockets. Good luck getting started. Make use of the search function if you want to search the forums for what is already available.