All Forum Posts by: Justin Phillips

@Eric Brewer My wife and I were faced with the same Sell/Keep as Rental decision last year. We decided that keeping the home as a rental, while retaining access to equity was the best route. We ReFi'd into a very specialized 1st position line of credit that's tied to a zero balance sweep checking account. We have access to up to 80% LTV, and all of our idle funds/checking deposits are swept directly towards our remaining balance. This saves interest cost, and allows our cash to work for us, not the bank.
It's be an awesome decision for us. We've seen continued appreciation, monthly cashflow, and we have our equity ready to deploy. I can't recommend this route enough to anyone who qualifies! 

@Wil Orozco I haven't heard of any book on that specific method, but I'm a huge fan of the strategy! My wife and I ReFi'd our Temecula Property into a very specialized 1st position line of credit that's tied to a zero balance sweep checking account. That allows all of our idle funds/checking deposits to be swept directly towards our remaining balance, saving interest cost. With every dollar that goes in, we're also increasing flexibility, and our available line to pull from. The best part, each property we purchase/pay-off using the line actually pays off faster than the last with the added cashflow! 
It's hard to beat the ability to be your own bank, and profit off of all your regular banking. 

@Kate C. Hey Kate, my wife and I faced the same sell/keep dilemma with our property in Temecula. We decided that keeping the property, with access to equity is the best of both worlds. Before moving, we ReFi'd into a very specialized loan that allows us to access equity for 30 years, and pay down any balance very quickly. 
It's been great, we've continued to see appreciation, monthly cashflow, and when the market turns we'll simply write a check from our line of credit to purchase the next property!

@Matt D. Hi Matt, I carry a loan that allows for 75% LTV on investment property purchases, and 70% LTV on ReFis. Rate is under 5% on investment properties, and even lower on primaries.
It is interest only, so it really maximizes flexibility. The Line of Credit is tied to a zero balance sweep checking account, so the loan is really designed to assist you in paying down the balance, while retaining access to every dollar. 
Unfortunately, you can only have 1 of these for each property type (Primary/Investment/Vacation). Many of our clients use it to snowball multiple properties under one line. 

@Jaime Martinez Jr The AZ market is super hot. The segment that I'm following the closest is Northern Arizona, where the weather is cooler. I think there's some very good long term opportunity as things continue to develop in the Phoenix market. 

@Jon Hill I agree with the overall sentiment, if you're happy with the property, keep it! Especially if you believe in the area long term. Cash flow and appreciation are a beautiful combo. 
Keeping the property, with access to equity is the best of both worlds. My wife and I refi'd into a very specialized 1st position line of credit that's tied to a zero balance sweep checking account. With that ZBA, all of our normal deposits are swept directly towards our remaining balance, lowering our interest cost. When the market turns, we'll simply write a check from our line to get into the next property. It maximizes flexibility and cashflow, plus you don't have to pay for the equity until you need it. 
It's the loan your bank doesn't want you to know about. ;)

@Chakri Dew Welcome! 
Sounds like you've made some nice improvements to your property! That will be helpful when it comes time to put some of that "Trapped equity" to work! 
We recently had a client spruce up their yard, and kitchen and they were blown away by their appraisal. $3k invested led to an additional $54k available on their credit line day 1. Gotta love sweat equity! 

@Mario Casarez Welcome! First off, I highly recommend any books that Bigger Pockets has put out. Hard to go wrong. 

As far as financing, I'm a big proponent of putting equity to use. My wife and I have a specialized 1st position line of credit on our property. We have access to up to 80% of equity anytime. Along with that, we're able to pay down the balance and save interest cost, because it's tied to a zero balance sweep checking account. So every dollar we deposit is swept directly towards our remaining balance, lowering interest cost and increasing our line available to pull from. When the market turns, we'll simply stroke a check from our line to get the next property. Each property purchased/paid off with the line actually pays off faster than the last with the added cashflow. It's a great way to snowball yourself into multiple properties. 
It's been a great tool for us, and I always recommend everyone educate themselves on the loan as an option! 

@Larry Fullard Yeah exactly, the line of credit is tied to a zero balance sweep checking account. So every dollar you deposit in checking is automatically swept directly towards your balance. This lowers the balance, and thus the remaining interest cost.

So instead of idle funds working for the bank, they’re working for you. The work much harder there than they do in any “high-yield” savings account, tax free.

With positive cashflow, it creates a large snowball effect where your balance and interest cost are both dropping rapidly.

So idle funds are working for you, while your growing that line of credit, staying ready to purchase your next investment from your line.

@Ethan Adams I do agree with Dave, I wouldn't leverage that heavy unless it was a can't-miss deal, or I had sufficient reserves. 
To answer your question though, it would probably make sense to take that $20k draw. It's essentially like a credit card sign-up bonus, they're betting you won't pay off that balance quickly. 
Say the rate is 4%, your interest cost for that $20k would be $66.67 in month one. From there, it's just a math equation comparing that interest cost to the closing costs. 
I hope that helps!