All Forum Posts by: Michael Mai

Goal - using HELOC to pay off the mortgage then prepare future funding using HELOC <--- I plan to obtain an investment property HELOC, lender suggestions are welcome, already reached out to Mountain America and FedPen

Recently found out about using HELOC to purchase another property or using HELOC to pay off your mortgage - lump-sum principal to save on interest ( calculate monthly vs daily)

Ex. obtain a HELOC for $30K, write a check for $30K on day 1 to pay off the principal on my mortgage. Put all my income into the HELOC account on the 1st of every month to reduce the daily balance, use a credit card (carefully) for all my expenses. End of the month, take $$ out of HELOC to pay for the expense, then 1st of the month, money goes into HELOC account again...repeat till $30K is paid off

Instead of paying the $30K to pay off the mortgage only once, I can use this strategy many times to pay off the investment property quicker. If down the road, I need the cash to purchase a property within 12months, I can either pull it out of the HELOC or my savings account

I understand the risks of foreclosure on non-payments hence I have the savings account sitting on the side (other housing funds) and a stable job

What do you guys think? Any suggestions or anything I am missing? Would love all the feedback

Thank you all in advance

0 Votes

Originally posted by @Matt Dickens:

Another good reason to do the HELOC is that you never know when the next good deal will come, or how much it will be. If you wanted to cash the money out, and start a private investment fund, that may also be an option. Less work that managing a rental or a flip and the difference between the rate you lend at and the rate you borrow at could still yield you a nice profit with a lot less work. While lending seems to be fairly available right now, most lenders have tightened their requirements, and you could fill the gap for an investor who used to borrow from banks but doesnt have a job or conventional job and now no longer has access to banks but doesnt want to pay for hard money.

Hi Matt -

Thank you for the response, I am still new to this and this is the first time I heard of the private investment fund. Do you have any experience in this? I would love to find out mor e

0 Votes

Thank you @Aaron Sussman I thought about that but then I thought there are some loan restrictions on how long you can obtain another loan.

Example if I do a cash out now and use the cash for a property down payment. Can I obtain another loan on the new property when I just completed a refi ?

@Brett Tvenge

Got some response for the cash out refinance rate

3.5%- 1.5% origination fee

3.375% 2% origination fee

3.25% 2.5% origination fee

Other fees

$750 processing

$500 appraisal fee

$38 credit fee

Title is about $1000

1 Vote

Originally posted by @Brett Tvenge:

Originally posted by @Chris I.:

FirstBank is a portfolio lender and does LOCs on investment properties in AZ. I've used them twice

Typically only smaller banks will do this, whether they'll do it for an out of state property probably depends on if they have a banking presence in that other location or not.

Are they lending through the COVID crisis? I am having issues finding a lender that can LOC an investment townhome I have

I will let you know I email them to have a lender contact me for cash out refinance

0 Votes

Originally posted by @Chris B.:

I'm considering a cash out refinancing a rental in Gilbert AZ and just got a 3.99% quote a few minutes ago. But I think thats probably leaving 30% equity which works for me. I'm planning to buy another property in the next 12 months.

Whoa that’s awesome ! Do you mind sharing what bank ? I have reached out to first bank and other lenders prior suggested here

0 Votes

Thank you all I appreciate all your help. I will be contacting couple banks to see a HELOC option

0 Votes

thank you all @Ashley Vellon @Stone Jin @Trent Stone Appreciate the response, my issue is that If I plan to purchase a house this year, I have the funds for it hence I don't need to cash-out refinance right now. Most banks are only paying 1% interest. However, I also agree with @Stone Jin Why would I not take the cash-out now and take advantage of the low-interest rate since investment property interest rate would only go higher

I figure I can delay the cash-out till right before I start to see either the interest rate goes higher or when the housing market starts to take a dip <-- in this case I can still capitalized on max cash-out amount

0 Votes

Hey all -

I hope all is well with everyone and the family =) ! I am in a difficult situation, hope you all can help with this tough question,

SHOULD I DO A CASH-OUT REFINANCE NOW OR A LATER DATE WHEN I NEED THE CASH FOR A PROPERTY?

I have an investment property in Mesa, AZ, currently cash flow positive 30 year @ 3.875%

I have enough equity to take out $70K, 30 year @ 4.125% if I do a cash-out refinance now.

My question is should I do a cash-out refinance now even though I don't plan on purchasing a house anytime soon? <-- I don't want the money to sit in the bank with 1%

I also already have a separate housing fund saved up on the side so this $70K would be an addition into my savings account.

Thank you very much for any advice in advance!

0 Votes

Originally posted by @Melanie Johnston:

Hi @Michael Mai, welcome to BP! I am partial to the AZ market as there is a diverse economic base, lots of people moving here and good weather (except for the summer months) to enjoy the outdoors. Our most prominent market analyst, Tina Tamboer, who publishes the Cromford Report, spoke to AZREIA last night and broke down the stats for our current market.

We are in a seller's market still, because supply is so low (at 14,400 active listings that's roughly half the 30,000 listings we would have for a balanced market) and, while demand is declining, understandably considering the state of our nation, there are still buyers in the market. The fact that hedge fund buyers have put their cash on ice means that others can compete for those homes (and it also contributes to the higher inventory, which their purchases would have kept from making it to market).

Having said all that, Tamboer does not believe we are headed for a market crash, but she does think there will be a window, perhaps starting in the next 60-90 days, where there will be fewer buyers, people won't be able to reenter the market until the economy picks up steam and sellers selling at that time will be motivated. Maybe that's your chance.

Congratulations on building your portfolio!

Melanie

I agree there will be a period hence I have been saving cash for this. Just looking for the right property to pull the trigger

If you have any lender on cash-out refinance, that would be great

0 Votes

@Dan H.
Hey Dan -
Thank you for the post, I have been renting for 3 years in SD actually but figured the AZ market is better for investing for the CF purposes. I was only planning on a new home if I can get a decent deal or duplex

I focus mainly on arizona for rental properties instead

0 Votes

All Forum Posts by: Michael Mai

Michael Mai has started 2 posts and replied 11 times.

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: Should I Cash-out Refinance in AZ?

Post: 2020 Arizona Rental Property

Post: 2020 Arizona Rental Property