All Forum Posts by: Ryan Howell

Why can't you get a similar rate on a 30 year?  3.8% doesn't seem that good for a 20y on a rental.  I would probably go 30 year, pay points if I can buy it down further and then continue to pay extra on it if you want to, so that you have flexibility/higher cash flow.

Great question. I'm a big fan of HELOC's. One reason is the closing costs are less. The other is flexibility. I tend to keep one HELOC open, and keep fixed rate mortgages on my rental properties if possible. Here's why: let's say you have 6 months of great cash flow on your rentals. You know at some point you will probably have a big expense (cash flow on rental property isn't steady but up and down). When cash flow us great, if you pay it all on your 30y mortgage, you have to pay to refinance to get that money back. Instead, pay it down on your HELOC. If an expense arises, take it back out. Now you're minimizing the interest you're effectively paying and you can still access the capital when needed.

Looks like you're approaching the deal with the right frame of mind.  One thing to dig into is the 2010 remodel...on a house built in 1920, be sure the remodel was done right.  See if necessary permits were pulled and know the electrical and plumbing status.  Both of those on older homes could be risky and more costly.

I would go with the 10y if your goal is to lock in the low rate as long as possible.  If you know you're pulling out equity or refinancing within 7 years, I'd go with a 7yr or even 5yr.  You just need to weigh the interest penalty vs likelihood of refinancing early.  10yr also helps ensure you get through a market cycle before your balloon is due which I'm a big fan of.

@Chico Ford - Congrats. Similar story to my own. I was an investor and worked in the corporate world first. My advice is to add value on BP every day and stay in the investing world. Get involved in your local REIA and start showing local investors that you understand the mindset. I've found the best opportunity as an agent is helping new investors navigate getting started. That's where I can add the most value. Most first time investors are wanting a house hack or to BRRRR. Walk them through how to manage the debt to income doing their first deal so that they can continue scaling and buying. Help them navigate ARV and repair costs (if you're comfortable), etc. Be a conduit to great property managers, contractors etc.

@Hannah Williams - It looks like you found a great deal AND 100% financing.  You might like to check out CREIA sometime as well.  We have some good local wholesalers.  Congrats!

I agree with Will.  Also, while a duplex is a great option, I've also seen that, at least in my area, there has been a lot more success finding a single family and doing rent by the room or finding a home with a partially remodeled basement to rent out as a separate unit.  You could also consider short term rentals (if allowed) as an alternative way to house hack.

My favorite two when I was starting was the "Millionaire Real Estate Investor" by Gary Keller and "The Book on Rental Property Investing" by Brandon Turner.  

You can have a specific # of traditional loans in your name (10 I believe). If you are able to get a traditional loan only qualifying yourself or your wife individually, that allows you to get more loans later (20 vs 10 if you do them jointly). If you can't qualify individually, but combined you can, then I wouldn't hesitate to put it in both your names to get the benefit of traditional financing and low interest rates. If you can't get a traditional loan, then I would recommend an LLC as it is generally required for an asset based lender or commercial lender. As far as liability protection, look into adding an umbrella policy to protect yourself.

My understanding (I'm not a CPA) is your depreciation is calculated on the purchase of the home (subtracting out land value) and doesn't reset with each new evaluation or refinance (although that would be great if it did).  If you buy two more you would be able to depreciate those based on the purchase costs (minus land value) as well.