All Forum Posts by: Travis Henry

I'm in the same boat. A lender I'm working with told me if he doesn't see the deposit on the two bank statements I submit to him, he won't ask where the funds came from and assume it's been in my account all along. I've read several posts from people discussing the ethics of this (as well as the potential ramifications), but my guess, like others have mentioned, is it will vary between lenders. Good luck!

Hi BP Community!

I live in Honolulu, so getting my feet wet in my market is going to be a little tougher and my mistakes would cost more. I've read several other members' posts about living in hot markets, like San Francisco, and trying to invest out of state. I have a realtor and lender in Tennessee and am looking to purchase my first investment property there before the end of the year.

I'm looking at purchasing a SFH or multi-family property for around $150,000 and planning to put about $50,000 down (~33%); of course, the DP requirement will change depending on whether I move on a SFH or a multi-family. I know, I know, I could put down less and use the rest for rehab or toward my next purchase, but my lender is telling me my DTI ratio is such that a $50,000 down payment is needed to get me to ~$150,000 purchase price. I've heard this from a couple of lenders in the area, as well. Maybe this is a Tennessee thing? Or just an investment property thing? Where my BP Tennesseeans at?!

At this point, I'm trying to determine a realistic time frame for getting my capital out of this first property. This is a basic layout of what's happening in my head, but I'm wondering if I'm oversimplifying things:

At Year 0:

Value - $150,000

Debt - $100,000

Equity - $50,000

At Year 1:

Value - $156,000 (assuming 4% appreciation)

Debt - $98,653 (30 yr. @ 5.50%)

Equity - $57,347

At Year 2:

Value - $162,240 (again assuming 4% appreciation)

Debt - $97,230

Equity - $65,010

My question is, is it possible at the end of year 2 to expect to be able to cash-out refi at ~80% of the equity ($52,008) I have in the property and recoup my original investment? Are there any other considerations that I'm missing? As I mentioned, this will be my first property, so any insight is much appreciated!

Thanks,

Travis

Just listened to the BP Podcast with Matt Faircloth and Matt mentioned that banks don’t want to see anyone (or entity) behind them in second position. Is this true everywhere or is it possible to provide a private lender with a 2nd on the mortgaged property as collateral? Is an equity play the only option when combining these two?