All Forum Posts by: Nnabuenyi Anigbogu

Hello,

I am trying to get a Heloc on an owner occupied 4 unit building. I finally found a bank to do it and im in the underwriting stage. I am almost through but the last item i need to provide are the leases for all the rented units. My biggest unit is on a new lease so no problem there. However the other two are inherited month to month tenants. I didnt put them on a lease since i wanted the flexibility to replace one of them and the other one is in the process of trying to buy a place. However i jacked up their rents and they have been paying the new rents.

Since i haven't owned this long enough to put it on my taxes, what is the best way to prove the other two units are leased and use the income as part of qualifying? Do underwriters accept written letters from the tenants?

Thank you

@Bob Green

Is it just flips that count as successful investment properties? What about turnkey buy and hold properties?  I have a condo that I did a live in flip(about 2 years) and a 4-unit that i bought at market value as a long term buy and hold (undervalued rents which are increasing) and want to know if they count.

I do have a couple of traditional flips im working on but they aren't complete yet so can't count them

Thanks

Hi @Account Closed

First question. Are the student loans federal or private? The reason i ask is because i was i a similar boat a couple of years ago. If the standard 10 Year repayment was used i would not qualify for anything (2 masters degrees are quite expensive). However i was able to put my student loans into income based repayment which cut my monthly payments by 3/4ths. This is then reported on my credit and the bank can use it to calculate DTI. It is a little tricky while you are in deferment but you night be able to get an income based repayment plan from the gov with monthly amount.

Now if they are all private loans it is much harder. If they wont give you an amount for the 30year it will be very hard to get the bank to calculate things in your favor.

@Alexander Felice

My current HELOC is interest only for the draw period (which is 5 years) and then converts to a fixed rate for the next 10 years with an interest + principle payment. The HELOC i just applied for 2 weeks ago also has similar terms.

@Andrey Y.

I would go with HELOC assuming the repayment terms are similar to what i have talked about (above). If they are restrictive such as the one Alexander has then go cash out refi.

Good job saving up the 30K. I know its not easy. I would personally recommend holding on to the money in liquid form (cash) if you plan on doing any sort of real estate investing. It just makes everything easier when you have some cash to throw into a deal without the bank hassle.

30k is a good downpayment for a decent flip deal with hard money or a cheap rental. 

Welcome to BP Debra. It is a great community to plug into. i look forward to seeing your successes. 

As Brie stated rentomenter is a good gauge as to what rental rates are pretty much anywhere in Chicago. i would caution though that for Michigan avenue, your ROI there might not be that high. Buying on Michigan ave (unless you are talking about way south) is sometimes akin to buying in NY in regards to prices. And the HOA fees really add up due to all the amenities offered in a lot of those buildings.

Please ensure that all your costs are taken into account because it is very easy to get burned buying essentially in the heart of downtown Chicago if you are not careful. 

Hey  @Mike B.

First of all welcome to BP. It is a great place to learn.

Ironically i am at the exact opposite spectrum from you. I know how the analyzing and funding of deals is done but i dont know anything about the construction side.

As to your question, most hard money lenders are asset based and dont care about credit. However the terms on the loan you listed are very steep. I am in the process of trying to secure a hard money loan at the moment and the average terms i come across are 4pts, 10-15% interest (varies based on experience and LTV), and 80% of purchase price and up to 90% of rehab.

6pt and 16% are way too high. I even know a 100% lender but he is at 5pts and 15%. If you guys have put some money together then you dont need 100% financing and can get 4pts and 13%. It makes a big difference to your bottom line. 

If you have more questions dont hesitate to reach out. I am also trying to flip in the chicago area and live in the albany park area.

take care.

Welcome to BP.

Looking forward to hearing about your successes. 

Congrats George. I cant even wrap my head around 20 properties right now. I also cant wrap my head around properties for less than 100k. Looking forward to seeing you hit 35.