All Forum Posts by: Jerry Padilla

@Vanessa Franco

You can always save up rental income to purchase another property. Saving money up for a down payment is how many investors get started.

@Misa Nguyen

A cash out refinance does have a slightly higher rate, and will also have a lower required LTV. You may run into issues with it. I would recommend getting pre-approved through underwriting if you want a step ahead. Make sure the condo is Fannie Mae approved. For a cash out refinance prior to 6 months, they are going to want you to source where the money came from - you are not using all your own money, so this could be a possible issue with lenders.

@Sam Sand

Primary residence renovation loans are great! There is FHA and Conventional options. It really depends on what you have for a down payment, the specific property and the renovations that need to be done on the property.

@Chad Kenerson

Have you built up equity in your current property?

This is a way some investors get started, is by pulling money out of their primary residence to fund the down payment of an investment property, if they don't have enough in savings. With conventional a SFR is at least 15% down and MFR is at least 25% down.

Let me know if you have any questions on financing!

@Travis Lewing

Welcome to the site!

Conventional is a great way to go! Rates are great still! Let me know if you have any financing questions!

You may want to consider a cash out refinance, on your primary, If you are planning to take the money out long term. You will be locked into a low interest rate, versus a HELOC - which is adjustable and the rate can go up.

@Marco Pangilinan

I did this with my wife and I's first home purchase. We also used the BRRR strategy with a few investment properties that we purchased as well.

My first property wasn’t a great deal. We bought for $133k and replaced the flooring, updated one of the kitchens - (a duplex) painted, and made a few other improvements. The assessment came back in at $150k - I know low and not that great, but it had been a couple of years so it was enough for us to refinance conventional with paying just a couple thousand in closing costs and removing mortgage insurance. It is now worth about $170k another 4 years later. This was all before BP! So I probably would have made a different choice at the time.

@Tiffany Smith

I have clients use the BRRR strategy all the time and use that cash that they pull out in a refinance to purchase more property. The rental income should be greater than any mortgages and liens on the properties. That way your tenants are paying the mortgages and there is some left over for repairs or any issues that arise.

When purchasing higher cost properties, as you mentioned, you are going to want to make sure that your DTI's are going to work to keep purchasing more.

You will be able to count 75% of rental income towards your DTI's, if they are too soon to reflect on your taxes. But if you are already loosing money on a monthly basis on the properties, you may want to consider selling the properties. I would recommend talking to your CPA prior to selling a property that has a significant increase in value to figure out the best timing to sell - if it is currently your primary, or if you need to hold for a certain period to pay less taxes on the gain, etc. I just don't think a property that you are loosing money on monthly, is a worthwhile investment to hold long term.

@Ron Singh

You will get the max cash out after 6 months of owning the property, without restrictions. You can start the process prior to 6 months and then close at that time. 
An appraiser is going to want to see the inside and outside of the property in a refinance. They will also want to know what improvements you made to the property to increase the equity. 
You don’t need a home inspection. The appraisal will make note of anything major that may need to be addressed for financing. 

@Kamil Nicalek

I as well, would recommend a cash out refinance on your current paid off property. You can use this cash to fund a fix and flip, or MFR. maybe a BRRR property?
A cash out refinance on a SFR you can pull out up to 75% LTV. A MFR you can pull out up to 70% LTV.

If you are looking to purchase a MFR investment property, for conventional you will be required to put down 25% plus closing costs.

@Robert Perez

I would be glad to assist. There is a 75k loan minimum.