All Forum Posts by: Jeff Kelly

@Mackal Smith this is a brilliantly elegant plan to attack your daughter's student loan debt! I love it! And it's a win-win all around, with your tenants benefitting as well as your daughter. Heck even the loan company (both of them! Your lender ok the properties and your daughter's lender) is benefitting. This is the kind of creative financing and clever solution that most people, unfortunately, never think of.

Following, @Will Proulx, and I asked a similar question here recently. I got some very helpful answers from some of the same people on this thread. Thanks, guys! But yes, I'd love to see the responses to your last question, in which you're asking to be walked through the proper procedure to make the loan from your LLC happen and use that #3 process. I'm hunting the same exact info. In my post/discussion asking a similar question, some people did attempt to describe the process, and weee helpful. I'm just looking to more thoroughly understand the mechanics with this now. So, You might want to search for my recent posts about Delayed Financing and Refinancing. I accidentally posted it twice but I got helpful responses on each post! So read them both if you can. But please keep hunting down the details and please let me know if/when you find them. I'll gladly do the same.

@Josh Springer is a man of action! Congrats, Josh! Even better, it appears you got into a good deal, and didn't just jump into the first available deal you found.

I heard of the same strategy once long ago, then again in 2017. I spent some time looking into it last Fall and yes, it works. The math works. But it requires tons of discipline and very actively managing your money flows going into and out of your various accounts, and the timing of those flows. I haven't set my household up to do this yet, and I'm not sure if we will try it or not. We just have other things we're trying to pursue and maybe after we get those things done, we'll look into whether we could realistically "stick to the plan" and get this done, and if so, how quickly. It can shave years off a mortgage, though. It seems like alchemy or something when you hear about it, but model it out and it works. (Not to hijack the thread, but there is also the not-quite-related idea of simply paying half of your monthly mortgage payment, but doing that twice per month. It essentially results in making basically extra payments in a year and that goes towards principle.)

@Chris Ye did you ever get a good answer to these great questions? And how did you decide to proceed? Did it work out? Thanks.

@Suzanne P. Even though it's been a few months since this thread was initiated, I'd still like to take you up on the offer to chat about your recent efforts and mine in Indianapolis. I'll message you.

Jade Richel @Robert Los Thank you for your responses. I ended up finding a GC for a quick ballpark estimate on a property. I did not pursue that property but I'm thankful for the responses I got here and yes, I'd be happy to chat with you each and see if we can help each other some day in the future.

@Andrew Postell and @Anthony Gayden Thanks a lot for your answers on this delayed financing / conventional refinancing question. I'll read those posts you wrote ASAP, Andrew, and I'm sure that will help me plan my next actions. If I have questions after going through that info, I might just reach out to you. And Anthony, I also appreciate you relaying your experience trying to do this. I hadn't modeled it out yet, but the closing fees really seem like they could have the potential of significantly affecting the investor's initial plans for the building.

Let's say someone pays cash for a property (and for the rehab) and then gets Delayed Financing for 70% or 75% of the purchase price (and rehab) soon after purchasing. My question is whether that person could then get a conventional refinance at some point later on for 80% LTV. And how soon could that cash out refi possibly be done after getting the Delayed Financing?

If someone pays cash and intends to rehab the property, delayed financing can get him most of his cash outlay back. But it can't get all of his purchase price plus rehab costs plus the equity he added, as could be possible in a normal BRRRR refinancing.

But could one do a quick delayed finance, get some cash back, rehab the property and add equity, put a renter in, and then refinance to basically get all his cash back? Or is there something about getting Delayed Financing that would prevent the ability to get conventional refinancing soon thereafter? If nothing would prevent that, then is there an amount of time the investor must wait between delayed financing and cash out refinancing? 

Forgive me if I'm out of bounds thinking this way, or if I'm being redundant. But I imagine for people who are relying on using, say, HELOCs for acquisition and rehab, it'd be great to be able to use "Delayed Financing" as a way to quickly get 70% of the purchase plus rehab price back so they can quickly pay back most of the money they took out of their HELOC. But, after having taken care of that immediate concern, it'd be even greater to then be able to get a regular 80% LTV cash out refi (after whatever seasoning time is required) on the very same property, because that would allow them to include the equity they've added, whereas that added equity (added via performing the rehab) is apparently not able to be included in the Delayed Financing's LTV. Does Delayed Financing include early pay-off penalties or something? Thanks for your thoughts on this.

Hypothetical Example: 

1) Pay $70k cash all-in for purchase and rehab. This money is taken out of a HELOC.

2) Get Delayed Financing at 70% purchase + rehab = getting 70% of 70k, or $49k back. 

3) Pay that $49k back to the HELOC to vastly reduce that balance. Keep paying the monthly interest payments on the remaining balance of $70k-49k = 21k. Put a renter in the unit.

4) Wait 6 months or 1 year for seasoning, and get a regular 75-80% LTV cash out refinance. Say the property is assessed at 90k. The investor would get 75% of $90k = $67.5k back. In the process, I imagine the $67.5k would have to first pay off the Delayed Financing loan of $49k. That would leave 67.5k-49k = $18.5k. That $18.5 thus would represent tapping into the equity that has been added.

5) The major benefit would be being able to reduce one's HELOC balance greatly almost immediately, and to also soon thereafter take advantage of borrowing on the equity that has been created.

Let's say someone pays cash for a property and then gets delayed financing for 70% or 75% of the purchase price soon after purchasing. My question is whether that person could then get a conventional refinance at some point later on for 80% LTV. If someone pays cash and intends to rehab the property, delayed financing can get him most of his cash outlay back. But it can't get all of his purchase price plus rehab costs plus the equity he added, as could be possible in a normal BRRRR refinancing. But could one do a quick delayed finance, get some cash back, rehab the property and add equity, put a renter in, and then refinance to basically get all his cash back? Or is there something about getting Delayed Financing that would prevent the ability to get conventional refinancing soon thereafter? If nothing would prevent that, then is there an amount of time the investor must wait between delayed financing and cash out refinancing? Thanks.