All Forum Posts by: Justin Phillips

@Hanan K.The suitability equation will vary based off the lender/product. It may be something like the current fully indexed rate + 2% to account for the variability of the rate. Typically though, if your DTI is looking good, suitability shouldn't be an issue.

@Hanan K. You bet! 
The lender will typically run the numbers for the Heloc they're qualifying you for being maxed out. That's for suitability, which is different from DTI. They're basically wanting to make sure you could make the full payment if you drew out the max.
I will say though that many lenders have been tightening things, so I can't totally speak to what some will tell you. When banks are trimming down, 2nd lien Helocs are often some of the first "fat" to be trimmed.
That's partially why we went for a 1st position LOC, as they have the staying power more similar to a traditional mortgage. Our is on a property down in Napa Jr., Temecula haha

@Hanan K. I would definitely start with your primary, as that's where you'll typically get the most access to equity. My wife and I ReFi'd our primary into a very specialized, 1st position line of credit. It's tied to a zero balance sweep account, so our regular banking saves us a ton of interest cost. Along with that, we have access to our equity for 30 years, so this one loan will fund many deals. It also greatly increases flexibility, and lowers DTI, among other things. It's been a great tool for us.

1. Open lines of credit, like credit cards, don't affect your DTI. Only outstanding debt balances contribute towards your DTI. 

2. If you find a great deal, definitely pounce! Otherwise, it's a good time to start getting funds and credit together to prepare for when the market eventually turns. Whether you find that deal in 1 month or 12, it never hurts to be prepared. As long as your credit isn't right on the edge, lining up capital is a good place to start.

3. Each property will have it's own underwriting/processing. It's definitely simplest to do one property at a time. After each property done you'll have the documentation ready for, so they should get easier and easier as far as the processing goes.  

Venmo is great. Super easy, quick transfers, and most people have it. Along with that, there is an option for tenants to pay with a credit card. I hope mine never need that option, but it offers some fall back. 

@Reece Stanley Very nicely done! Thanks for sharing, pictures are always fun to see. 

@Forrest Faulconer Now you've got me curious, drop a link to the worst you've seen! 

@Kailey Wilderman Welcome Kailey! Always important to have a strong "why". Wishing you the best in your investing career! 

@Mike Bianchi It's a tougher environment to put money to work right now. That being the case, my wife and I refinanced our property into a very specialized 1st position Line of Credit. We're letting our idle funds sit on our balance, which works for us at 8x the average "high yield" savings account, tax free. When the market (Both RE and Wall Street) turns, we'll deploy those idle funds and our equity into purchasing more investments. 
You make your money when you buy, and I'm not in a space where I want to kill myself trying to find or "make" a deal in this market. 

@Travis Mullen If its over $100k, too small shouldn't be the problem. Depending on the property/level of remote, it might be tough to get financing for. 
If it were me, I'd pull cash from our credit line. Might want to check out options on "self-financing" or seller financing. 
Greer is awesome, the Elk capital of Arizona! 

@Matt Brunner Wow, I love it! That's crazy. Did you include the CRV in your ARV? Not sure about Washington, but California refunds $.05/can Haha
I'd love to see an "After"!