All Forum Posts by: Justin Phillips

2x4? That's a valuable weapon! 

It sounds like you're on the right track. Talking to the PO and Trooper will be a great place to start. 

@Account Closed There are many, but the biggest with this loan in particular is that the line of credit is tied to a zero balance sweep checking account. So every regular checking deposit is swept towards your remaining balance, lowering your outstanding balance, and saving you interest cost. On your balance, It works harder for you than it would in any "high yield" savings account. 

Along with that:
-There's a 30 year draw rather than the typical 10. 

-Direct Deposit/Bill Pay

-Lifetime cap on interest rate is often half of a traditional Heloc

Investors love it, as it enables them to be there own bank. Not only do they profit off idle funds/deposits, but they can fund deals themselves using that equity. Each additional property that paid off or purchase with the line pays off faster than the last with the additional cashflow. And it's all on auto-pilot, removing the need to play the transfer game.

@Frederick Karnoski My wife and I faced the same sell/keep dilemma with our home. We decided that keeping it as a cash-flowing rental, while having access to equity was the best of both worlds.
We Refi'd into a specialized 1st position Heloc that allows us to access up to 80% of equity, with a much longer term and more stability than traditional helocs. It's been an awesome tool for us. We've continued to enjoy cash-flow and appreciation, and we have that large line of credit ready for when the market turns. I always recommend everyone educate themselves on the loan, as it's a huge asset in building wealth.

@Yuri Woitscheck My wife and I faced the same sell/keep dilemma with our home. We decided that keeping it as a cash-flowing rental, while having access to equity was the best of both worlds. 
We Refi'd into a specialized Heloc that allows us to access up to 80% of equity, with a much longer term and more stability than traditional helocs. It's been an awesome tool for us. We've continued to enjoy cash-flow and appreciation, and we have that large line of credit ready for when the market turns. I always recommend everyone educate themselves on the loan, as it's a huge asset in building wealth.   

@Mauricio Arroyo Did the bank give you a reason? That seems very low given your equity position. Your DTI might be a factor, but if the home is your only debt, your DTI should be fairly low. What's you're monthly payment? No child support or anything?

@Louis Lollino Not sure what state you're in, but we offer a specialized Heloc that has an option to fix the rate for a set amount of years. Although, we typically don't advise it, as it's just an additional cost paid at closing. 

@Jessica Downs Love the goals! This is a great place to learn and network, it will definitely be a huge asset in getting there. Best of luck! 

@Eric Brewer Hey Eric, I'm assuming the issue is DTI when rental income isn't counted? I'll shoot you a PM and help you take a closer look.

@Sam Reddy With those numbers, I'd probably lean towards sell. However, it really depends on your goals. 

As another option, my wife and I ReFi'd our property into a 1st position Line of Credit that's tied to a Zero balance sweep checking account. That sweep account sweeps all of our normal checking and idle funds directly towards the balance. This saves us a ton in interest cost as it snowballs. The only "payment" we're held to is a low interest-only cost, so it also maximizes flexibility, were something to ever go wrong. 

In your case, your max credit line would be set to $525,000. (70% LTV for rentals, 80% for primary). So you'd have access to $150k in equity on day one. Along with that, your interest only cost in month 1 would be $1,484. With positive cashflow, that should be the highest that you ever pay. So the loan itself actually frees up more cashflow, and thus helps that snowball effect.

If you wanted to hold the property for the long-haul, there's not a better loan for flexibility and cashflow. 

At the end of the day, you're in a good spot! Equity brings options. Best of luck! 

@Wilson L. My wife and I used a similar strategy. We ReFi'd into a specialized 1st position line of credit that's tied to a ZBA. We did this while it was our primary residence, but it has now become a rental. The line of credit allows us to access that "trapped equity" anytime. With the ZBA, every normal checking deposit we make is swept directly towards our remaining balance, saving us interest cost. We were able to set our line of credit based off these inflated values, but we don't have to pay to access that equity until we use it, rather than tying ourselves to 30 years of higher payments with a cash-out. 
We get a 1098 at the end of the year for interest paid. As long as it's upgrades or real estate purchase related, it's tax deductible. 
It's been an excellent tool for us, so we always recommend this loan to anyone who qualifies!