All Forum Posts by: Paul Defngin

Quote from @Mike Dymski:

old habits die hard...

 Indeed.  What can possibly go wrong (sarcasm) :-)?   

@Andrew Swart you got a lot of great feedback. 

Another place I recommend you look at is the NMLS Consumer portal.

Things to check:

Is the person licensed or registered if working for a bank. 

How long has the person been licensed or in the industry? 

Has the person jumped from one company to another? You can see this when you click on their self reported employment history. 

Given this is probably one of the largest financial decisions that you will make in your life; you’ll probably want to trust your finances to someone who’s got a little bit of experience. 

If you enough equity on the property, then you should be able to:

a) Get the mortgage refinanced and do a cash-out, although, you may lose the rate that you currently have on it, but if the money is to be repurpose for something else that makes money, maybe it won't be so bad since techinally your tenant is paying you to pay the mortgage. 

b) Contact Signature FCU. They are out of Virginia and typically will go to 75% combined loan to value for investment properties - and I believe that they will do business in NC.  

Quote from @Matt Smith:

I just purchased a property in Tampa today. Got it for 239k cash only deal. It can be used as a rental or an easy flip. Its a 3/2 1260sqft block home. ARV is 360k with estimated repairs being only cosmetic at 10k. Rental comps are between 1800-2200. Bounced it off a few investor friends and all said it was a great deal. The part I need help with is the financing. I'll be using my HELOC for the down payment and rehab budget. The HELOC is at 3% right now until June 1, then it jumps to prime rate. I'm using hard money to carry the remaining balance of the loan. The interest rate on the hard money is 11%. I'm not crazy about that rate. That puts me at roughly $1900/month payments on the hard money and 53k due at closing. Should I shop around and look for a better rate? What should I do? Thanks

I'm confused. You paid $239k cash on it but then you need HELOC for the down payment? Did you mean to say you paid cash of $239K, and now are using your HELOC and hard money to do the rehab?

Usually when I hear someone say that they paid cash for a property, I automatically think that the property was purchased with no liens against the property, meaning you paid CASH for the property, but maybe I am just confused.  

That said, if you did pay cash for the property and reading from what you wrote; you only need about $10k for cosmetic repairs, which seems pretty, pretty, good, if that is realistic, then I would say, ask someone in your network or SOI for the $10k that might be able to get a better rate on their money but less than 11%.  Although, I would say that 11% for hard money that you noted seems pretty good, but that's just my opinion. 

In any case, congratulations on the property and best of luck. 

@Milton Johnson I'm confused. You used your VA loan to purchase a multi unit with 4 units, 3 of which are month to month and the 4th is going to get notice of increased rent?

Which one did you occupy?

Quote from @Courtney Nguyen:

@Caroline Gerardo we are not taking a loan from bank. We will take this loan from the parent LLC. So just trying to see what is the legal interest rate we can set on the loan.

My recommendation, seek advice from an attorney in the State that you are doing this with and is familiar with usury laws of that state, etc. 
 
While this forum is helpful, going to an attorney directly would probably be wiser than getting it from this forum. 

Just my 2 cents.

Quote from @Judith Farhood:

I have been living in my house for over 2 years now. I want to buy a new house (in a more convenient location for my family, but only 30 minutes drive from this house) and rent this house. The market is good for house rental in my area, so this is not a concern. This would be my first investment property!!! But for now I am planning my budget, mortgage/HELOC, and logistic strategy.

My rental management agent told me that the house need to be vacant to be ready for rental and visit from potential tenants. Yet, I need to prove that I have rental income from this property to qualify for a new mortgage, as only my pay-stubs won’t be enough to qualify me for a 2nd mortgage. I don’t know how and where I could live without spending a fortune with 2 kids and pets for a couple of months or so.

Question 1: How do I do the transition then?

Also I need to start shopping for this 2nd mortgage and an HELOC (for down payment and potential renovation). My research seems to say that Credit Unions or virtual-only lenders would have the best deals overall (lower interest rates, lower closing costs, and less hidden fees).

Question 2: what does it mean to shop for mortgage/HELOC in practical term in my situation? Could some lender grant me a mortgage just based on the projection of the rental income and still give me a good deal?

Thank you in advance. I appreciate all your feedback and ideas!

@Judith Farhood, you don't necessarily need to have the house rented BEFORE you can qualify. Maybe, your PM is telling you that the house must be vacant in order for more prospective tenants come to visit but there are people that would just as easily want to look at your property without vacating and see if they'd see themselves in your home, after you moved out.  That is no different, I think, when you're listing your property while you're living in the house. Will it be challenging? Sure, but the idea that you must vacate the property before you can have someone visit the home as a prospective rental is ludicrous. To counter that logic, clean and put your place in order so someone can visit your home and see themselves living there. Chance is that if your home solves a problem for someone - for whatever reason, i.e. location, convenience, school, your expected rent, etc., they will wait for you to vacate before they move in. 

If you find that person and you solve their problem, you can sign a lease with them and have them move in when you vacate the home. 

Then use that lease to offset the mortgage that you have on the current home. No positive cashflow can be counted since you do not have a history of rental properties, but this should at least help you use your income to qualify for the next home without having to count the current mortgage. 

Talk to a good lender in your area that understand FNMA guidelines regarding conversion of your primary home into a rental property. 

Share with them this:

What is required when converting a primary residence to an investment property?

https://bit.ly/3JZHPrH

Oh, before you think of buying the next home, do everything you can to open a Line of Credit on your current home. Do that before you even go the path of buying the next home. 

Good luck. 

@Stephanie P. when they find that investor, we'd all want to know their info so we can do business with them ;-)

Quote from @Sarah Hatton:

Quote from @Kelsey Jurewicz:

Quote from @William Daley:

Hi BP,

I have a single family home in Albany County, NY. I purchase it in December. The renovation should be complete this month. 

I paid cash for the property and renovation. 

I would like to keep it as a rental and pull cash out.

The home is owned by my corporation and I would like to keep the loan in the business name, without any personal guarantee if possible.

Anyone that can guide me in the best direction I would appreciate it.

If your able to help fund me in NY even better!

Thank you.

 Cash out refinance. You can take up to 80-90% of your homes value. 

You can do 80-90% on a cash out refi? For real? 

 @Sarah Hatton, I'd like to know that investor :-). For real. 

Quote from @Cathi Korelin:

Where do I go to find 20% down money. I have a seller finance office building but I need the down payment. I am a licensed Realtor.

Your sphere of influence. Your network. 

Partner with someone who has what you're looking for and is looking for better rate of return on their money. A percentage of something is better than zero. 

Good luck.