All Forum Posts by: Leo B.

Has anyone used a Solo 401K to fund down payment on a home and hard money to finance the rest of the purchase and rehab of a fix/flip property?  I understand that you can only use non-recourse loan with the Solo 401K.  If the hard money lender bases their financing solely on the asset, then this would be considered non-recourse, right?

Ok got it.  Thanks for the replies, all.

Hello all-

Would I be able to purchase a fix and flip project with 1031 proceeds? Below is just an example of a scenario.

Original purchase price of rental home is $425K

$400K loan balance

$500K sale

$15K closing costs

$85K net proceeds

Would I be able to use the $85K to 1031 exchange and purchase a fixer for $415K and needs $85K of work and still defer taxes?

@Mike H. Thanks for the reply. I'm sorta confused on the use of a HML and then to do a rate/term refi with a portfolio lender. Whether I use all cash to purchase or use a HML, if I perform a refi to cash out, I am limited to cashing out only the purchase and closing costs.

I've re-read your post several times.  Maybe I'm not getting it lol.  Is there a difference between a cash out refi and rate/ term refi that I'm missing?  I'm thinking they should be the same?

Indianapolis is such a huge metro area with many different neigborhoods.  Classifying neighborhoods is difficult because locations can vary greatly "block to block" as most are saying.  Is there a neighborhood map showing what areas to avoid (aka. war zones)?

Is there a decent website online to check for crime rates around a specific property?  I tried searching online and there isn't much I've found.

Thanks all.

-Leo

@Jerry Padilla

Perfect!  The links were very helpful!

For delayed financing, I just want to clarify the maximum amount allowed to cash-out.  I have an example below.

I purchase a SFH at a discount for $50K cash plus $3K closing costs. No rehab required. The value is $80K. 75% LTV is $60K. I can only pull out $53K and not the max LTV of $60K. Is this correct?

If there are any rehab costs, I cannot pull that as cash out either, correct?

What's the minimum seasoning required to cash out without the above restrictions?  12 months?

Also, I would like to confirm the use of rental income when you do a cash-out refinance.

I can only use the current lease amount or "potential market rent."  How does the lender determine "potential market rent?"  Does this mean the property doesn't have to be leased to take into account rental income in the refinance?

Thanks again, Jerry!  I will be contacting you outside of the forums to discuss financing needs.

Best,

-Leo

@Charles Worth

Thanks for the referral!

@Brandon Turner

Does this apply to newly rehabbed properties also?

@Davon Lowery

Thanks for the reply.  I think we are talking about 2 different scenarios.  My situation is based on a rehab investment where I purchase the property and fund the rehab with my own cash.  My questions are around after I fix the property, what are the seasoning requirements if any for performing a cash-out refinance.

@John Powell

Thanks for your input.  From my experience, I haven't had to show tax returns to show income.  I just show the lease and bank statements to prove the income if it's less than a year.

You bring up a great point regarding DTI and having reserves to show. That's something that I definitely have to keep in mind and have to strategize on more.

@Pete Tam

Thanks Pete for your reply.  I've connected with Mike already.

@James Wise  Thanks for the link to the neighborhood classes.  It's very helpful.  I registered on your website for more property info.

@Larry Fried  Thanks for the welcome!  Yes, the Midwest is definitely attractive for rental properties when compared to the Bay Area.