All Forum Posts by: Michael Dunn

Christopher Brainard and Upen Patel,

Thank you both for your replies

I have a Scenario question , relating to Instant Equity/Seasoning Period/Cash-Out refi.

Example:

Let's say you purchased a property for $65,000 ( including repairs ), and if you were to get an immediate Appraisal after the repairs, it came in at an ARV of $90,000

So if you got a LTV of 80% , that would be $72,000

Purchase price of $65,000 , 80% LTV on $90,000 ( ARV ) is $72,000 ...... So there's " Instant " Equity of $7,000

My question then is .... Could you immediately do a Cash-Out refi. for the $7,000 , without having to wait on any Seasoning Period ?

Thanks again for the help

Mona,

great advice . I appreciate your recommendations

There is something that I am confused about , and that is the following ......  " The New Loan amount must NOT be more than the borrower's initial investment in purchasing the home + you can finance the Closing Costs . Initial Investment is defined as the Sales Price, NOT the Sales Price + the Cost of Improvements done to the property "

So from the above statement, this seems to mean that the New " Cash Out " loan can NOT equal more than the Initial Purchase price for the property + the Closing Costs ?

Also, if the Property is an Owner Occupied , what is the max LTV that I can expect ..... 85% ? 100% ?

What I am not understanding is ..... How do you get Actual Cash out of your property, if they will only Loan/base the amount of the Cash-Out refi on the Purchase Price , nd Not on what the properties ARV is ?

Example .... If you purchase a property for $60,000 ( includes Closing Costs ) ,

and they will do a LTV for the Cash-Out of 85% , this would be $51,000

So where does the Cash you can get come from ? You are in the " Negative " by $9,000

If the 85% LTV was based on the ARV ( say $80,000 ARV ) , then I can see where there is Instant $ to get from the house , as a Cash-Out ..... $8,000

Just a bit confused as to how this process works. Thank you for the help

Hi,

I need some guidance on which direction / approach to take , in my pursuit and goal of acquiring Rental properties, while at the same time flipping a house here or there to use the profit from the sale, to pay for the 20% down, on the next Rental.

My two main questions are .....

1. Should I NOT flip any of the houses , and just purchase each using financing ( from a Bank or a Lender ), and put 20% down on each Property?  This way, since I'll be purchasing each as an Investor, I should be able to do a " No Seasoning " Cash-Out refi , as soon as I close on the property... yes ?  And if so, I could use that $ for the 20% down on the next property ( this assumes I purchase these for around  20% Below Market value )

2. Is there any benefit to Flipping a property vs holding onto it as a Rental ?  If you sell it then you give up a monthly Cash Flow stream , BUT you get a large Sum of money for the use of maybe paying Cash for a Property ( assuming you can find one that makes sense to pay for it in Cash )

Thank you for any an all advice

Just have a quick question, as I've been researching my question online, but would like to confirm it with others .....

I'm getting that you can only do a

Cash-Out Refi with No-Seasoning period

If it is an O.O. , then you have to wait 6 months to 1 year to do it .... depending on your Bank/Lender ?

And lastly, when you go to do the cash out refi ..... what's the max LTV that they'll give you .... 75% ? 80% ? or even 100% ?

Thank you for the help

I'm going to briefly  lay out where I currently am, in the process of my Real Estate Investing and Rental property journey,

and wan to get other members/Investors advice as to if I should change or consider doing anything different . Thanks in advance for the help and contribution(s) to this thread

So, I currently own a property that produces $1,500 per month in rental income, and my own personal PITI I $500 per month .... for a monthly cashflow of $1,000

From here, I am considering doing either of the following......

1. a Cash Out refi. , and using this money for the either down payment of 20% to purchase a $80,000 - $100,000 property that is an REO here in my area, which would give me a PITI of around $600 a month , and I can easily rent a property in this price range in my area for around $1,100 - $1,200 per month .... for a monthly cash flow of around $500 - $600 per month.

I could then "Hopefully" do a No-Seasoning Cash-Out refi ( since I'll be purchasing the property as an Investor/Investment Property ).... I am a bit unsure if my Lender will do this No-Seasoning Cash Out refi on a property that I put 20% down on as an Investment property ?

2. my second Option / thought is to use my VA loan, and purchase a nicer home / one that will rent for $1,300 - $1,500 a month ( afer the 1 year O.O. rule is meet ) , and plus I can technically get in a " Future " rental for 0% down .

I could find an REO/foreclosed property that needs minimal repairs ( since VA loans are quite strict on the condition of the property in order for it to qualify and get approved for a VA loan ), and then do some updates ... paint / flooring while I live in it for 1 year , and then repeat the process of doing a Cash-Out refi and use the money for a down payment of 20% down on another $80,000 - $10,000 property.... wash ,rinse,repeat

3. The third and last option I am considering , is to use the money from a Cash-Out refi , and purchasing ( All in cash) a Lower end property ... $15,000 = $20,000 ( this includes all the repairs as well ) .

On a property in this price range in my area... there not in the best of areas/neighborhoods .... but the rents are still in the $500 - $600 per month range, and I will at least own the property outright and will cashflow a nice profit per month, while also increasing the properties value ( by painting, re-flooring, etc. ), so that if I ever go to sell... Flip it, I can likely make a $10,000 - $20,000 profit .... so long as I purchase the property for the right price

Anyways, I wanted to get others advice and opinions on the forementioned scenarios and see what others thoughts are.

I really appreciate the help, Thanks so much

Mark,

great advice and thank you for all of your insight and help

Is there a reliable way for me to go about finding a local

REO listing agent in my area .... Memphis,TN ?

Is there a website that lists these agents ..... the HUD and HomePath websites themselves I'm guessing ?

Thank you again

So your best bet to avoid any financing of the property issues, is to " Hopefully " find a property that is an REO/Foreclosure that the previous owner took care of and just could no longer afford the note, and moved out without leaving the property in shambles

I know you can't get a house such as mentioned above for as good of a deal s you can o one that needs some work ...... But could you still " Likely "  still get ANY property that's listed on these websites..... could you get the property for What the Bank has in it still ?

Or will you always have to pay more than what they are still owed on it ?

I'm sure that the longer a property has been listed ( regardless of if it needs much work done to it or not  ), that you stand a better chance of getting a deal on it ?

Mark,

Thank you too for your reply

So does this mean that as long as I have enough money in Cash to put Both 20% down , as well as pay for all of the repairs in Cash ..... That I should be able to qualify for one of the listed properties on either of the two websites listings ?

Hi  Aaron ,

Thank you for your reply

This is what I was thinking too, in that those properties that are insured will only need minimal ( if any ) required repairs

So then ..... if I put 20% down and pay in cash for any and all repairs ( both required and any updates/upgrades that I may want to do to the property ), then I shouldn't have a problem in getting a conventional loan on a HUD or HomePath property ( so long of course, s log as I meet the Credit score and DTI requirements for a Conventional loan ) ?