All Forum Posts by: John Alosio

@Jeff S.

Thank you for your reply.

I'm sorry if my question was a bit muddled, but you did touch on a helpful portion.

To clarify, I'm looking to get a 1st position HELOC on my primary. Which I should not have any problems to qualify. I'm just curious about what happens after that. With an open HELOC, parking my idle cash into it instead of holding in a savings account. Would that hurt me when pursuing future investments due to not having any actual cash?

Your comment is telling me that it probably shouldn't matter, as long as i have an attractive income/equity to justify more debt. Correct?

Thanks!

Hello wonderful people of BP.

I have a question regarding a 1st position HELOC "all-in-one" "offset mortgage"

I have a basic understanding of the way in which these products work. But I may be missing some key information. Just trying to wrap my head around how this strategy would affect my future investments.

Currently I own 2 cash flowing investment properties. So I’ve got excess capital sitting around just waiting to deploy towards repairs & cap ex. I’m interested to convert my primary home to a 1st position HELOC to accelerate my savings to reinvest.

My concern is that if I pursue this system of dumping my surplus income into equity, how then would I look to a lender if seeking to expand my portfolio via a traditional mortgage.

Under normal circumstances, lets say I have 50k sitting in my savings account. I look for a mortgage and have enough liquid funds to close. DTI is solid. No problems.

With an All-in-one HELOC, how would an underwriter differentiate liquid from equity? Wouldn't it appear that I have no cash?

Thanks for your insight.

-John

Hi @Roxanna Pifer great to meet you.

I'm in Saylorsburg & Mount Bethel. I've been looking into Bangor to invest but the area seems a bit sketchy to me. I'd love to learn more about it.

let's set something up!

Calling all investors!

Hello BP family (Northeast PA)
I have in my possession a treasure-chest full of sticks and scraps (leftover from renovation projects). I'm willing to part with this booty in exchange for some good conversation, shared knowledge & experience.

Currently I hold 2 cash flowing properties (4 doors). I'm looking to expand my local relations. Hit me up if you are interested & have some time to spare. Lets meet up, walk away with some gold-plated lumber.

Lehigh Valley - Slate Belt - Monroe county - Northampton county - Poconos

@Kaitlyn Castillo

School of hard knocks. I began my journey with a house hack duplex. Seems the safest / easiest way to get your foot in the door.

I only learned about bigger pockets after my second property.
I was lost in the dark before BP. I feel like BP (as a whole) is my mentor.

Consider yourself lucky to have this wonderful community on your side from the beginning!

cheers!

@Emilio Urias

I'm not sure the specific criteria for an underwriter. From what it understand, it can range bank to bank. I got the feeling that my underwriter was being a stickler. Maybe you'll get lucky with a more lenient one. But again, IDK exactly how it works. Perhaps someone with more knowledge can chime in....

I know that they looked at my Tax filing. My income from the previous property was basically -0- after I satisfied my monthly mortgage payment. The new property was fully rented, and still they refused to factor that into my DTI. I hope that your underwriter may be more willing to work with you.

Good luck!

@Account Closed

I tried to phrase my response as neutrally as possible. I don't want to generalize and say that it WOULD definitely not work. I'd hate for Kyle's brother to miss out on a deal just because it has a high potential of difficult outcome. The fact is that we don't know all the details. It's not fair to make assumption. BUT, I would have to agree with everything you said.

From personal experience...

My first ever tenant that I placed into my house-hack was a train wreck. Recently divorced woman, straight out of her former house. She was wonderful for about a week. Then her entitlement kicked in. She was so used to having a man around to take advantage of, then beat into submission. Well i became that man. The target for her aggression. Her suspicion. She was always the victim and I was always out to get her. The icing on the cake was when she couldn't get her car out of the driveway because she had to shovel snow for herself... she came knocking on our door freaking out to my 7 month pregnant wife that this was somehow our fault (i was not home at the time). Even though the lease clearly states 'snow removal is your responsibility'. But it became our fault that she was late for work and lost her job. There's so much more but I don't want to relive those 5 long months. I'm done

Yes so... I learned a lot about screening tenants. Red flags. "she seems nice, I'll give her a chance" blah!

@Kyle Soderman

Divorce is never easy. I can only imagine stress levels are high.

I'd have to recommend screening her as part of your due diligence. If she would make a good tenant under normal circumstances (25-30% rent to income ratio amongst other things), then it could work.. If she is not rentable, I don't think i would walk into this with all the baggage attached. If she falls behind on rent, you may have to try to evict this family from a house that they used to own. Sounds like it could get messy.

I don't know all the details and numbers. But a good deal is a good deal. If she checks out, and you have a tolerance for risk, Id say go for it.

Cheers

I'm a buy and hold guy. I currently own 2 cash flowing properties in
addition to a “modest” w2 income. I gross about 90k total with the
rentals. I'm looking to scale sooner than later. I ran into a tight
underwriting on my second property due to my high DTI (this was pre
covid).

The past few years i have been shoveling most/all of my capital back into the
properties. 2020's tax filing came in at a loss of 10k after all the
deductions. 2021 is looking to be not far above break even. My question
is… is there any advantage to strategically NOT claiming deductions for
the purpose of making myself look more attractive to a lender?I
understand that there are lenders that offer non QM loans. But the come
at a higher cost for the life of the loan.. I’m looking to see if
there is might be a benefit to using this strategy to save the bump in
interest rate…
Thanks in advance!

What is the intent of this second property? Strictly investment or another house hack?

For me, my first FHA-duplex-house-hack was a live-in-rehab. After many nights and weekends of sweat equity, I refinanced into a conventional loan 1.5 years after purchase. The house appraised with whopping 30% equity! (started with 3.5% down payment).

Then i began my search to repeat the process.

When my second FHA -duplex-house-hack was under contract, the underwriter put me through the wringer. I had to jump through hoops to prove that I had every intent to occupy this new property. Also had to fight with them over my Debt-to-income. They refused to accept my original duplex as positive cash flowing because the rental income was only enough to cover the mortgage payments. I could only prove income from one of the units since I was living in the other, they wouldn't accept the future promise of additional income once I moved out.

BUT eventually I prevailed, currently I'm in the process of stabilizing the new property.

Hope this helps

Cheers

 @Bill E. @Emilio Urias @Mary Ann