All Forum Posts by: Ash Hegde

@Jourdan Mercer a W-9 will give you the information that you need to fill out a 1099 to send them (name or company name, address, tax status, SSN or EIN). It's a great idea to get this up front before paying them so they have an incentive to give you the information. 

It's the same concept, using your own cash or a using hard money loan to buy and fix before a refinance. Only difference is you are paying yourself back instead of someone else. You'll save on points and interest that would have been paid for the hard money loan. 

For the refinance, if your personal income supports it, the rates will be better if you get a conventional loan. You'd have to title the property in your own name, at least during the process of closing the loan. If your income does not support the mortgage, DSCR is a good option. Both can be over a 30 year fixed term.

Most folks are going to be in it for the long term, which is probably why recapture is not mentioned often. You just brought up another great pro - the step up in basis for your heirs when you pass on - you get all the benefits in your lifetime then your kids get to reset the basis and get them as well! 

If you're going with multifamily, FHA will allow you to keep that low 3.5% down payment that conventional won't be able to match. The downside is higher mortgage insurance and it's for the life of the loan.

@Jevon Shaw you bring up a good point. Once you commit to RE, especially if you take advantage of the most aggressive tax benefits like cost seg, you are committing yourself to RE for the long term. Selling a property that has depreciated for several years will give you a big tax bill, unless you reinvest the money into another property with a 1031 exchange. 

A couple of options - if you want to work his plan (sounds like the BRRRR to me), you could use your funds as a down payment on a hard money loan to buy a distressed property, fix it up, get a renter, then refinance out and get your money back (this is not always guaranteed so do a good job with your analysis).

If you want to use it as a down payment on a more expensive property, you could use a DSCR loan, which would use the rents vs mortgage payment to qualify rather than using your personal income. The rates are higher than a conventional loan and you'd be at 100% leverage doing it this way (risky!) and a variable rate on the HELOC (risky again!) but it is possible.

That 250k property does look like the best target, it has enough equity to pay back the HELOC and it isn't at an extremely low rate like your primary is.

Andrew nailed it. Create an entity (usually an LLC) and outline everything in the partnership agreement.

Justin is right, construction loan should work here. Since you own the land, you'll get credit for the land value as part of the down payment. Looks like it's already zoned properly as well. 

Unless you are talking about friends and family, private money lenders will still want someone with no experience to put something in for a down payment (I word it that way because very experienced flippers might be able to get zero down loans). If you do have friends and family with enough cash to purchase and renovate a property, you could do the BRRRR method, and your exit would likely be a DSCR loan for long term financing so you can pay them back (these loans use rental income to qualify rather than personal income). Keep in mind you would need a get a value add deal here in order to get all (or most) of your money back on the refi.

If you get a seller financing or subject to deal you would only have to deal with a bank when you refinance. Here again, a DSCR loan would be the exit if you want to, but depending on the terms you might want to just keep the seller financing or subject to financing long term.

If you can find a co-signer and money partner, that will open the most options for you.