All Forum Posts by: Joshua Massari

There are still a handful of lenders that do these, but they are not handed out like candy the way they have been the last 10 years. Bank of the West probably has the best terms and highest loan limit. If you are looking for a smaller amount (under $250k) then there are a lot more options. I think I only found 3 lenders that would go up to the $400-$500k range when I was trying to refi my current heloc on an investment property. I wasn't able to qualify full doc due to tax return AGI and another large heloc I had just taken out, so I went out and found private lenders that would do 3rd position loans instead of refinancing my 2nd position heloc. 

Quote from @Bob Langworthy:

I was under contract on a deal last fall for $575,000 with a seller carry of $100k and 10% down from me. I talked to the bank in advance to be certain that they were good with it. The second was an addendum to the P&S.

Hope this helps,

 Your first position lender was actually ok with this? Knowing that you were essentially financing your down payment on a seller carry back? 

Quote from @Carlos Ptriawan:

Quote from @Joshua Massari:

Be careful taking advice from someone on this forum that tells you this is a bad idea. There are many different scenarios and every individual has a different financial situation which may not apply to your situation. That being said, I will say this is how I did it. 

8 years ago, I was able to roll my employers 401k funds over to a Solo 401K ( similar to a SDIRA). I still worked for my employer at the time but I had started a side business that allowed me to set this up. The financial advisor that managed the previous company’s 401K tried to talk me out of it but said it was ultimately my money and my choice. The amount at the time was $80k. 

Today, that $80k is now worth over $800k and about to hit $1MM with some deals I am currently closing out. 95% of this money is invested in real estate through directly owning SFR's, writing private real estate loans, syndications or some other forms of real estate. The account is starting to move into larger commercial deals and becoming more powerful as it continues to snowball in value.

People that told me this was a bad idea 8 years ago, aren’t saying that today. Now that my 401k is worth 4X what theirs is invested through traditional mutual funds, they want to know how I did it. At the current trajectory this account should hit around $50MM before the IRS requires me to start taking minimum distributions at age 72. ( I’m 40 now )

So be careful taking advice online from someone that has probably never used this strategy before. Is there better ways to grow your money? Maybe. There’s several ways to do this, but this particular strategy has worked really well for me and my situation. Again, everyone’s situation is different and you need to do your research to see what makes the most sense for you and your family. 

 1. true, i also always borrow up to 50k to fund my RE purchase
2. wow, was surprised that I can transfer 401k to Solo 401k while still working at the company, do you have URL how to do this properly ? lmk.

@Carlos Ptriawan  I also take out $50k loans to myself to help with down payments on other purchases. This is a great strategy. 

I don’t have anything to refer you to on roll overs. It has always been my understanding that this is your money and you can do this at anytime. The OP ran into some issues which sounds like it is more of a company policy and not an IRS rule. I guess it depends on your company and whether or not they will allow this.

Be careful taking advice from someone on this forum that tells you this is a bad idea. There are many different scenarios and every individual has a different financial situation which may not apply to your situation. That being said, I will say this is how I did it. 

8 years ago, I was able to roll my employers 401k funds over to a Solo 401K ( similar to a SDIRA). I still worked for my employer at the time but I had started a side business that allowed me to set this up. The financial advisor that managed the previous company’s 401K tried to talk me out of it but said it was ultimately my money and my choice. The amount at the time was $80k. 

Today, that $80k is now worth over $800k and about to hit $1MM with some deals I am currently closing out. 95% of this money is invested in real estate through directly owning SFR's, writing private real estate loans, syndications or some other forms of real estate. The account is starting to move into larger commercial deals and becoming more powerful as it continues to snowball in value.

People that told me this was a bad idea 8 years ago, aren’t saying that today. Now that my 401k is worth 4X what theirs is invested through traditional mutual funds, they want to know how I did it. At the current trajectory this account should hit around $50MM before the IRS requires me to start taking minimum distributions at age 72. ( I’m 40 now )

So be careful taking advice online from someone that has probably never used this strategy before. Is there better ways to grow your money? Maybe. There’s several ways to do this, but this particular strategy has worked really well for me and my situation. Again, everyone’s situation is different and you need to do your research to see what makes the most sense for you and your family. 

Quote from @Alison Marcus:

Hello Joshua, I saw your note from about a month ago regarding a HELCOC on a rental property. Could you share with me what bank you found that issues HELOCs on Rental Properties? I'm having trouble finding one. Thanks for your help!

The answer is very few these days. Penfed used to be great for rental property HELOCS, but as of 6 months ago they have dropped this product from their lineup. The best option I found that still does them is bank of the west. They will only do 65% LTV which isn’t as good as Penfed’s 80% LTV, but at least for now they still offer them. There are others I found that will do them, but they have low max loan amounts around $250k, which didn’t work for what I wanted to do. 

I know this is an old post but wanted to add this reply if anyone is searching this topic. I had a heloc with a CU that I took out when it was a primary. I moved out and rented it for a few years. Then called back my LO at the CU to refi the heloc since the value had gone up. When they realized it was their loan and now a rental the LO told me that I wasn’t even supposed to have that loan anymore since they don’t do helocs on rental properties. She didn’t seem to care enough to report it and I ended up refinancing with another CU that allowed helocs on rental prospectors. I think this depends on the bank and of the allow helocs on rental properties at the time the loan was underwritten. As mentioned above, banks don’t really track this since they are not notified that the property has become a rental and it really only comes to their attention if you try to refinance with said bank. I suppose if that LO wanted to play by the rules and tell whoever needed to know, they could have ended up calling the loan, but seems highly unlikely that this would happen especially if you are making your payments on time. 

@Matthew Crivelli - doesn’t effect the landlord until the renter gets a dog you don’t know about that bites a neighbor. Then the property owner gets sued. Maybe that’s just a CA thing but it is a very real scenario to be considered.

@Derek Young - Would you mind sharing which banks are offering 75% LTV HELOCs on investment properties. Penfed used to do 80% but just stopped these a few months ago and the best LTV I am finding now is 65% with Bank of the West or if banks will go higher on the LTV, they have lower max loan amounts like $150k or $250k which is what I have already so I am trying to unlock more equity.

SDIRA and Solo 401k are not the same thing, but both allow you to purchase and own real estate. A Solo 401k has more requirements to qualify but is easier to control and maintain. Talk to  @Brian Eastman and @Dmitriy Fomichenko for more info. Both are very knowledgeable and can help you set this up. 

@Stephanie P. I've been looking into bank statements loans which would be much easier for me to prove income. I will be acquiring the property as a primary residence so hopefully I can find someone with a reasonable LTV and lower down payment. Thanks for the info