All Forum Posts by: Michael Dumler

@Steve Sauro Yes. Similiar to that of a traditional mortgage, a HELOC will require closing costs and can add up to anywhere from 2-5% of your total loan. Keep in mind, the lender is going to reassess your property to determine the value of the home. Your closing cost will most likely inlcude, an appraisal fee, underwriting fees, title fee, recording fee, etc. The question I have for you is why do you plan on getting a HELOC? Do you plan to use the the line of credit to purchase another investment property? Hope this helps!

@Ockert Kruger the five year reapplication is only pertinent to interst-only loans, not fixed rate mortgages. The real advantage of house hacking is not necessarily to acquire a low interest rate, but rather more to utilize a low down payment. For example, FHA insured loans require the borrower to bring 3.5% to the closing table as a downpayment, while many conventional occupation loans only requre 5% down. Furthermore, with interest rates at all time lows, I highly advocate that you take advantage and lock in your rate. If you acquire an asset that helps cover the mortage plus some, there is no significanlt reason to use an interest-only loan. Hope this helps!

@Jacob Shadix paying off the HELOC should come directly from the cash flow of the STR. Otherwise, if income (rent) is not meeting the monthtly payments of the HELOC, you don't have a good deal.

@Annie Ruffino you need to account for your state laws as well. Most states require that you give the tenant at least a 30-60 day notice to vacate, you can't just kick them out on day one after closing. I would negotiate with the seller and have them give the notice and that the property plans to be sold with new management in place. If the property is delivered vacanct, then you can turn the unit around and get a new tenant at market value rents. Hope this helps!  

@Brittany Edwards chu if it is indeed a legitimate fix and flip in a hot market, then more likely then not the seller is going proceed with a cash or hard money offer at hand. Furthermore, a conventional loan is only going to finance the property, this would not include the rehab as well. When it comes to financing a deal via hard money or privtate money, I highly recommend that you run your number religiously and have your systems set in place. Hope this helps! 

@Tanveer Ahmed with your plan, it seems as if you would just about break even, and therefore may not be worth the hassle. How much equity do you have in the property? Why not try and purchase a new property to house hack and turn the current home into a rental? Or as someone has already alluded towards, rent the rooms of the current home. Hope this helps! 

@Scot Evans different hard money lenders will offer different financial products, but at the end of the day the lending requirements are based upon the deal itself and your financial position as well. Similiar to using a traditional mortgage, you need to contact/interview several HML and verify what they can offer to you. I would stick to using referral based lenders and keep cautious of non-trustworthy lending firms. Hope this helps!

@Mason Peterson Pep Agent on YouTube is the way to go my friend. The instructor breaks down all of the concepts and principles to easily understand. He also has a website which I rcommend you take a practice exam on. Hope this helps! 

@Ezra Shami the general rule is that closing costs make up about 3-6% of the purchase price of the property. The closing costs and your down payment is your cash to close requirement and what you as the buyer will have to bring to the table at closing. Whenever working with a lender, ask for a loan estimate to get a disclosure on all of your closing costs/fees. Closing costs include a wide range of items such as an appraisal fee, survey fee, attorney fees, title search fee, escrow fee, mortgage insurance depending on the loan, HOA fees, title insurance, property tax, recording fee, etc. As you can tell already, closing costs are a big part of buying a property which brings up the importance of negotiating for seller concessions (seller pays part of closing costs) during the transaction. As an investor, it's important to includ closing costs in your analysis as well. Hope this helps!

@Ryan Cleary I have never heard of an FHA distance requirement. The only rule of concern is that you occupy the property as a resident during the first year of purchase.