All Forum Posts by: Shayan Sameer

As several folks have mentioned leveraging equity in current property you owned is a great tool but still comes with the some of risks as you had before using hard money debt as there is never a guarantee your new project will be a success (there will always be risks with real estate investing).

Leveraging your investment property would probably be the first step I would take. If you use a DSCR loan you could maximize the equity you could take out while still breaking even on the mortgage + taxes + insurance. In this case even if the project went south and you broke even or even lost money, the equity (debt) you used would still be covered by the income you are earning on the rental property.

its part of the game, work on getting better terms with time. For example, my average terms are 90%-100% LTV and 10% interest flat no points or pre-payment penalty. I originally started as 80% LTV and 12% + 1 point with 3 month prepay penalty

It varies for me city by city here in south Florida. Stick to your numbers! let the numbers do the talking, and don't force the deal. I use HML for all transactions

@Joseph Lalia lets connect so I can get a better understanding of what you are looking for. @Ray Hage you the man keep crushing it!!

Shayan,

Best option to avoid issues and stay risk free along with having a better approval chance would be to go with a Cash out refinance. A Heloc is an open end mortgage same as a credit card the only benefit is that you only pay on the amount you borrow. The down fall is a Heloc can "Never" be used as an asset or for PITI reserves required when buying a new Primary or investment property.

A heloc can also cause major issues with credit and one slight hiccup or missed payment the bank or lender who is holding the Heloc can close or reduce your line of credit. Even if you make all of your payments on time there are times when something happens by accident or a collection pops-up and drops the credit scores. 

Again even if you have great credit as you start to add more credit cards, mortgages, auto loans to your credit you can also be viewed as "High risk" due to Excessive trade lines in credit or higher DTI - debt to income ratios. Some banks and lenders will calculate your Heloc payment based on the Max limit even if you only have a small portion used due to preventive risk. That alone can kill a deal due to over the Max DTI limit.

A cash out refinance is tax free and its an immediate liquid reserve so it can be used as an Asset or PITI reserves. Basically cash in the bank is a very good way to get an approval on bigger loan amounts or in general. Higher assets or cash in the bank increases what is called you compensating factors which banks/lenders use to qualify. Cash out or cash in hand also allows you to avoid having a heloc sit in 2nd lien position and you cannot borrow more money until you pay off the heloc.

Cash out refinance is one loan and if you need more you can simply do another cash out refinance.