All Forum Posts by: Skyler Smith

Mark! Welcome!

What type of investing do you plan on getting in to? Utah is a great place for real estate investing, and there are a lot of good resources here on Bigger Pockets. I like searching topics on here, you'll find that we have a lot of investors nearby!

Hope it goes well for you

@Kristin Hamilton

Yeah, you'll probably need to get your license AND become a Realtor to get a commission and have MLS access. Good luck!

I would talk with local banks and credit unions. What's your holding period on the new property? The massive advantage you have with a HELOC is that there is no origination fee if you pay it off and then want to buy again. For flippers or buy and holders investing less than 2-3 years, this is huge. If you have no closing costs, you could buy-fix-sell or buy-fix-refinance over and over again with no closing costs!

If you know you're going to be holding it for 10+ years, you could talk to a *local* bank and see if their commercial lender could encumber the existing property as collateral to buy the new one and you might not have to put any money down at all. A cash out refi is not bad, but there are other options that can work for your situation as well.

Not everybody at the bank is going to know what a "portfolio" loan is, I've found that the commercial lender is usually the one to talk to. That or they know who to send you to. 

In my jurisdiction we have a few brokerages that are not Realtors, there are some spec builders here that are pretty active but don't really need to pay for MLS access and all the other fun stuff. You could look around for that type of brokerage, knowing that you won't have all the perks of being a Realtor, but keeping an active license to do a few deals off market if you like.

You probably don't need your RE license to do your own flipping and manage your own properties. What is your goal in getting the license?

One last thought. Have you considered just borrowing against the existing property to buy a new building and keep this one at the same time? If it's cash flowing, you could double dip with not too much more exposure than selling and buying new.

You could find a broker that will offer a pocket listing. You sign an agency agreement that gives him the exclusive right to sell, and then he can take it and run with it knowing that you won't turn around and give the listing to someone else. That way he can market it part of the time off market, maybe list it down the road.

Your best exposure is usually going to be listing it on the MLS or Loopnet, or whatever is popular in your area, but not all sellers want to sit on the market. It might take a search but you should be able to find a broker that will do this for you.

My experience has been that some local banks or credit unions could do what you're looking to do. You have to talk to the right guy, not everybody at a bank is going to know what a "portfolio loan" is, and you'll most likely be talking to the commercial loan originator. I've seen many options, like encumbering one property to buy another, and offering lines of credit on something like the $25k house you have there.

If you  are ok with living in a fixer upper, it could be a fantastic investment. It sounds like the bank is quoting you an owner occupied loan, so you only have to pay 3-5% down, provided you live in it for a year. That's how I got started as well, and it was great! It's a strategy that doesn't work for everyone's family situation, but if you can swing it, it can be an excellent way to get started, and for new investors to get their foot in the door!

Hey Jeff,

In my area it's typical for a spec builder to ask for something like 3% as an "additional earnest money" or some type of non refundable building deposit, but only if they are customizing items on their own. Here a spec build sale doesn't close until it receives a certificate of occupancy, or when it's reached substantial completion. 

I typically translate $100/mo cash flow to "this property doesn't cash flow." How much equity do you think you have? A little more than $10k of equity on a $40k house is a lot, but a little more than $10k on a $500k house is way too close for comfort. At $100/month you're not holding for cash flow, you might want to hold for appreciation, but you don't have much of an equity position in this either. If you're going to hold, you'll need to refinance out of your HML. If your equity position allows for 70% LTV or less then a refi is probably right for you.

How long is the term of your hard money loan? Even if you're cash flowing with the hard money in place, you'll probably have to renew your HML, including the origination points, which could get you to that $10k number pretty quickly, in which case selling would have been the better option. Have you tried refinancing? If you can refi into a longer term loan with lower interest and pull all your cash out, I'd keep it as a rental.

Lots to think about, give us some numbers and you might get a stronger opinion out of me ;)