All Forum Posts by: Kwok Wong

Aloha,

I recently purchased my first investment studio unit in Waikiki Oahu using HELOC and some of my saving. Now, I am looking for advice for my next move. Any input will be greatly appreciated.

Purchase price: $210,000

HELOC: $200,000

Interest rate: 3.6%

Rent: $1,500

Cash flow: -$67.50

I was planning to refinance in the next one or two years, put the unit under a 30-year fixed mortgage loan, and pay back the HELOC. That would be the best scenario that I could think of. But it seems like interest rate is not going to go down anytime soon, at least not low enough for me to refinance and cover all expenses. I want to pay off HELOC because I would like to use it for my future deal.

Secondly, I do not want to sell the unit in the next five to ten years, would prefer 1031 exchange it, but if it makes more sense to sell, I would do so.

So, I do not see that I can/should refinance or sell in the near future. Thank you for any response in advance!

Best wishes,
Kwok

Hi guys, thank you for your input. I have learned my lesson.

To add more details on this story. The tenant replied via text message on one day before my entry. She states that I’m liable for any damages, including theft. Therefore, I want to avoid any future disputes by providing proof. Or it’s unnecessary? 

Aloha, 

I got a couple of questions about Notice to Enter here on Oahu. I am trying to get access for my rental property for rental photos purpose. However, the tenant was out of town and did not respond. There’s couple things that I have done to get access. 

1. On the first day, I asked for the tenant’s availability via text message but no response.

2. Two days later, I opened the tenant’s mail box, put in a Notice to Enter, and called the tenant and left a voicemail (still not getting response). 

Apparently, tenant was out of town, did not receive any notice and not able to be there during my entry. My questions are, first, did I violate any laws by opening the tenant’s mail box? All I did was open the mail box, put in the notice, and closed the mail box. Nothing else. Second, how do I prove that nothing is damaged or missing because of my entry? More importantly, how should I handle this situation better in the future? 

Mahalo for any input.

Kwok

Quote from @Eliott Elias:

Whats the home worth? Sounds like you're breaking even after taxed and insurance. Any vacancy will kill you 

Hi Eliott, 

According to Redfin, it is $1,100,000. I will definitely pay more attention on other expenses in the future.

Thank you

Quote from @Nathan Gesner:

Using the HELOC is just another way of borrowing 100% of the purchase price. You borrow to borrow. It's over-leveraging and I only recommend it for experienced investors that can pay the HELOC off in under 12 months.

On top of that, you're not calculating cashflow properly. Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

Hi Nathan, 

Thank you for your opinion and cash flow the guide. Because I do not have much capital at this point, I have to use HELOC for the downpayment, and get a loan for the investment property. How a experienced investor can pay the HELOC off in under 12 months? Using cash flow only? w2 income? or and other resources?

Thank you

Quote from @Joe Villeneuve:

Yes, you do need more info.  You need to find a different property to buy.  This is a loser on every front.

You have negative CF (when you include the payments on the HELOC), you're not building any equity (interest only payments), and in 10 years you will have to come up with the entire cost...with nothing to show for it.

This deal has no potential.  Just because you can get Seller Financing, doesn't mean the seller will give you a deal worth buying the property.

Also, you NEVER want to spend extra money to pay off a mortgage on a rental property.  All you're doing is adding to the cost.

 Hi Joe,

Thanks for you input. Your advice is really helpful. More questions if you don't mind. 

So when using HELOC, do you recommend paying it off with cash flow? Should I use my w2 income as well?

How do I build up my equity when using seller financing?

Thank you

Hello everyone, I am still learning here, and recently found a potential seller financing single family home opportunity here in Kalama Valley on Oahu. Can anyone help me to analyze this seller financing deal, please?

Sales price: $1,160,000

Down payment: $200,000 (using 5 year HELOC, 200K is the limit, 3.6% interest rate)

Balance $960,000 at 5.5% Monthly interest only payment: $4,400

Property taxes: ~$252

Homeowners' insurance:~$168

10 years balance is due

Potential monthly rent: $5,300

I currently have a $500K mortgage, am planning pay off the single family home by paying little by little during the 10 years, and using cash out refi or apply a new HELOC at the end of the contract.

Do I need more information to analyze the deal? I am thinking to negotiate a lower sales price, and/or monthly interest so the monthly payment can be decreased. What should I pay attention on when dealing with seller financing? More importantly, how can I make it a better deal? Greatly appreciate for any input.

Thank you,

Kwok

Hello everyone,

I am currently going through rental applications for a family. I wanted to reject them but they think it's inappropriate and trying to get my approval. 

Reason #1 that I want to reject, one of the applicant did not turn in verification of employment because he does not keep his pay stubs. This person has to wait for the latest pay stub to be mailed. I called the supervisor, but no one answer the phone.

Reason #2, I wanted to call to do a verbal verification of employment for other applicant, and they think this is too much and feel uncomfortable. It's a government job and pay stub was provided for this applicant.

I called and talked to them about my decision and they are not willing to accept result. They tried to provide whatever documents they can to get the approval.

My questions, should I wait for them to provide documents or reject them? How should I handle this situation appropriately?

Thank you for any input!
 

Quote from @Kapono Kobylanski:

Which building is this? I heard that the Ilikai always cash flows but I haven't gone as far as checking the numbers yet. I do have access to them from a STR property manager I know on island. Can't you just get another HELOC in 2 years when it's close to the deadline? I'm a novice so I have no idea. I just used my Heloc for the down payment on a STR in Oregon this year. My first official investment property. So far it's cash flowing well but I don't see any bookings for two months from now. It's not like Hawaii STRs. I have a 30-day STR until April 2024 and then I need to find mid-term renters. That is a cash cow. My Oregon PM keeps telling me it will do well and its her job to worry about it booking so I'm trying to keep my cool. I do trust her well enough but I do have some reserves and I can always long-term rent the house for minimal returns as a backup strategy.

I'm sure your property will be well worth it in ten years or much less. Honolulu legal STR options are rare.

Hi Kapono, thanks for your reply. The building I am looking at is the Island Colony. I was thinking to pay off the HELOC with the cash flow generated, never thought of getting a second HELOC. It's something new to me. Thank you!