All Forum Posts by: Jody Sperling

Nebraska is great, though our real estate taxes are way high. Omaha and Lincoln have fared well even during recessions. Growth is steady, income to rent ratio is fair. Iowa, parts of Michigan, Ohio, Missouri and Kansas are all great states as well.

The Boise market is insane. I have a close friend who lives in Meridian, and he had owned three rentals at one point, so we always talk about partnering, but I can afford 3 separate houses for the price he could get one. Makes it tough to do business out there. Best of luck!

My point of view has always been, as long as you know where the money is going to come from, and there's enough access to money to fund a sustained state of emergency, such as 6-months vacancy or a destructive tenant, put any and all money you can to work building you wealth.

In fact, if you can tell me how to convert credit cards into cash without the cash advance, I'd be grateful.

The scare stories of fluctuating interest on HELOCs are nothing short of criminal. It is true that a bank can adjust interest rates, but they are prohibited from usury, and there are limits to how much interest can raise from one year to the next—legal limits. You're 100% safe using a HELOC for assets. In fact, owning a property outright, and not using the equity to invest is the thing that's dangerous.

Suppose you fall on hard times and can't pay the taxes of that home. Well, even though you own it out right, if you default on taxes, the bank can repossess and sell that home and you have nothing. So I'd much rather use the equity as leverage and get into other cash-producing assets.

All that said, it is a best practice to bank locally for these things. Even if a national bank will offer you a HELOC, and it has lower interest, find a local bank or credit union to work with. They need your business and they won't wake up one day and say, "You know, today we're closing all our Lines of Credit customers because the risk is just too great." (Yes, Wells Fargo, we're talking about you.)

Even if the bank did close your Line of Credit, it's transitioned into a loan, just like any loan you take from the bank. And even if you encounter an emergency worst case scenario and the bank calls your debt due in full, you can find a secondary institution to refinance. We're talking like a 2008 type of catastrophe happening before you'd have to worry about notes being called due, and still you'd find banks to back you as long as you held cash-producing assets.

As long as you use a HELOC to purchase an asset, you win. Don't use it to buy a boat or car or a vacation and you'll be a-okay. Best of luck!

Central air for sure. You'd be hard pressed to find a better value add after new windows.

To start with, if you're going to BRRRR, you need a way to offer cash. You can do that by borrowing privately from friends, family, and family of friends. An offer of 14% simple interest on money borrowed tends to be a good starting point. Alternatively, you can go to a hard money lender and get similar terms, usually a bit more expensive. That covers the B of BRRRR.

Once you own it, you Rehab it with the remainder of the money you borrowed. When it's rehabbed, you Rent it. From there you have a few options. You can wait six months for the purchase to season, allowing you to work with the residential or personal mortgage department. When you refinance with them, they will appraise, and typically offer you between 80 and 95% of the appraised value in cash. You accept the offer, take the dispersement, repay your private loans and Repeat. Alternatively, you can use the commercial lending side of a bank and Refinance almost immediately, but in this case, you'll almost always have to leave 25% of the appraised amount in the loan.

Best of luck!

The 8k in closing costs seems way high, but the rest seems great. First lien HELOCs are the most powerful investing tool I know of.

I think I'd look for another bank or institution that offers the first lien HELOC and compare costs, but you are absolutely onto the right product so in general, pursue that with determination.

And to avoid assumption, check out velocity banking if you haven't already. The concept was created for first lien HELOC holders, and it's the best wealth accelerator I can imagine.

Could you convert it to a Short Term Rental? Could you sell it on a Wrap Note?

In your situation, I'd sure be tempted to try both above avenues before going the conventional seller's route. With STR, you can often turn a dud property into a cash cow.

If it's not in an ideal STR location, you could advertise it to a buyer who maybe lacks the credit score to be approved, but wants to own. With the wrap note, you'd still cash flow while the new owner built equity. In 5 years perhaps it balloons and you take the lump sum. No cap ex to worry about, likely a long-term situation, and you have the asset as collateral.

Either of these options keeps you moving forward from a cashflow perspective but insulates you from the rat race. Best of luck!

A top quality BRRRR will leave no cash in the deal, meaning you can scale infinitely. You should aim to leave no more than 5% in a decent BRRRR. Any more than that—if you're simply buying houses at or close to retail, and leaving money in the property—that's not BRRRRing.

The saying, "You make your money on the buy" has always been true, and will always be true. Instead of saving up to buy your next rental, start using some of your money to run a marketing campaign to find steeply underpriced homes. A yellow letter, a bandit sign, or even a personal postcard to houses you identify from driving for dollars will return far greater value than buying market value.

Commercial loans underwrite the asset's potential for income. They still run your credit and you can absolutely be denied for poor credit, but it's a much more open process. If you don't research, you'll likely not notice much of a difference in how the lending process goes compared to personal mortgage loans.

People make too much of the DTI and Fanny and Freddy guidelines. Work with local banks and credit unions. Get to know the commercial lenders. All of my properties are on commercial mortgages except the one I own outright. The interest rate is a bit higher, but I'm cash flowing well, so its gravy to me.

Commercial lending immediately considers rent as income, whereas personal banking needs to see the rent payments season for two years before including it as income. I found it helped to divorce from questions of rates, because they're misleading anyway.