All Forum Posts by: Jerry Padilla

@Katarina Cordero

@Philip Sriployrung

If you have the cash on hand, it is better to initially pay cash for the property and then cash out refinance after the renovation to avoid paying closing costs twice. 

Another option for the beginner investor is a renovation loan, that ties in the renovation costs to the loan and there is no need to refinance afterwards, but you will be out the initial down payment. With this product you are also limited to 4 financed properties including the subject property. 

@Valerie Clemens

There are also renovation loans as well. They are great for the beginner to roll the renovation costs into the loan, but you are subject to 4 maximum financed properties with renovation loans. Are you looking to move into the property as well? 

@Joshua Stewart

From what I am reading, to make this work..... You would have to divide and sell the lots to  buyers who would then be able to obtain a construction loan. 

@Ericka Grant

If you use a local credit union or bank then you typically don’t pay any closing costs. They just have you commit to keep the line open for at least 3 years.

@Ericka Grant

My suggestion would be option two since you are living in the property now. Once the property is paid off then get a 1st position HELOC on the property. This will allow you to access the money at any point when the next investment property is available. You will have access to the capital at a decent rate and interest is only charged when the credit line has a balance. The HELOC is best done with a local credit union or regional bank as they offer the best rates. Big mortgage companies typically, don't offer the best rates as they put their focus on a standard conventional loan.

@Account Closed

I am confused on the rational of using conventional financing will cause you to burn though all of your money on a single investment. Typically you have to put money down no matter which way you finance the deal. 

Conventional only requires 15% down on a SFR and a MFR requires 25% down.

With hard money your interest rate will be much higher than conventional and you will burn money at a much faster rate paying the high interest. 

@Matthew Stone

I would consider cash out refinancing your primary residence to purchase another property. On a duplex, that is a primary residence you can cash out refinance up to 75% LTV.

@Jared Hartley For conventional you would have to refinance into your personal name. If you want to keep in the LLC you would have to go with a portfolio or commercial lender.

@Kristi Beeksma

You would be refinancing up to a higher rate. If the property is a SFR you are looking at a mortgage of about $161.25k, leaving you with $48.25k minus closing costs. If the property is a MFR than you are looking at a new mortgage amount of $150.5k leaving you with about $37.5k minus closing costs. I would consider refinancing if you are able to put that down a new investment property and you cash flow better on the two properties, than you are cash flowing with just the one property.

@Christopher Oyenuga

You can BRRR an investment property at an LTV of 75% with the SFR that you have and if you purchase MFR's than the LTV changes to 70% for a MFR (2-4 units), based on current appraised value, as long as you have owned the property for 6 months at the time of closing on the new cash out loan.

I would cash out on property # 3 (if you are thinking of using the money for more investment purchases). Depending on how property # 2 is financed would determine if the refinance is worth it. If property # 2 was done with hard money and you have a high rate, than I would consider refinancing. If you paid cash and are going to use the money to purchase more property than I would consider cashing out. If the purchase and renovation was done with a renovation loan and you have a decent rate, than I wouldn't touch it.