All Forum Posts by: Trevor Finn

@Kevin Akers,

You’re in a great position to leverage your equity! Here’s how I’d approach it:

• For the 9.5% Loan: Refinancing into a DSCR loan makes sense to lock in a lower fixed rate, especially if your goal is stability and better cash flow.
• For the 7.25% Loan: If the local bank's investment HELOC offers a competitive rate, consider it for flexibility. HELOCs let you access equity as needed, keeping costs low unless you use the funds.

Key considerations: If you plan to scale quickly, the HELOC might provide the liquidity you need for faster moves. However, if locking in lower rates and simplifying payments are prioritized, DSCR refinancing on both properties could be a better long-term play.

What’s your next investment strategy—another rental or a flip? Your answer could guide whether flexibility or fixed rates are the way to go!

Hey @Otis Clayton,

Partnering can be a fantastic way to scale, but setting clear expectations upfront is key. Here’s a strategy:

1. Define Roles and Responsibilities: Agree on who handles what (e.g., funding, management, deal sourcing) based on strengths.
2. Bylaws to Include: Cover profit/loss splits, decision-making processes, buyout clauses, and what happens if the partnership ends. Clarity here avoids future disputes.
3. Business Strategy: Align on your goals—flipping vs. rentals, risk tolerance, and timelines. Are you scaling quickly or focusing on steady, long-term growth?

Evaluate forming an LLC to protect both parties and outline everything in an operating agreement. The right structure ensures a smooth, win-win partnership! Also, consider creating a JV agreement for the specific opportunity you and your new found partner decide to pursue!

Have you found someone yet?

Hey @Brett Jurgens,

Great position to be in! 

A 1031 exchange could help you diversify into higher cash-flowing properties or a market with stronger appreciation potential. However, keeping the property and borrowing against the equity (via a cash-out refi or HELOC) allows you to maintain your tenant and rental income while leveraging the equity to expand.

Key considerations:

• 1031 Exchange: Great for avoiding capital gains taxes, but make sure the new property offers better returns or diversification to justify selling.
• Borrowing Against Equity: Keep the steady Denver appreciation and tenant while using the funds to acquire another property. Just ensure the new loan doesn’t overextend your cash flow.

The best move depends on your long-term goals—cash flow vs. equity growth vs. diversification. If Denver’s appreciation is still strong, borrowing might keep you growing while holding onto a great asset! Best of luck with your decision!

Hi @Catherine Javier,

Your options each have pros and cons, but let’s break them down strategically:

1. Renovate and Shift to MTR/STR: This could maximize cash flow ($2,400+ for MTR) and offset the costs of renovations. However, with limited cash available, you'd need to ensure the return justifies the upfront expense. Consider if refinancing after increasing rents could work, and whether MTR/STR demand is strong enough to sustain long-term profitability.
2. Keep as LTR with Minimal Cash Flow: While this avoids a cash outlay, being cash flow negative or barely breaking even isn’t sustainable long-term. It keeps your asset, but rising costs and no property management may stretch your time and energy.
3. 1031 Exchange into WA: If local management and long-term appreciation in WA fit your goals, this could work. However, the high down payment and reliance on a DSCR loan could limit flexibility, especially with your DTI constraints. A 1031 also adds complexity and timing pressure.

Watch Out For:

• Opportunity Cost: Renovations tie up cash that could go toward other investments or reserves.
• MTR/STR Management: These models require more time and effort than LTR, even without a property manager.
• Market Risks: WA properties may appreciate slower than expected, and higher costs could reduce your margins.

If cash flow is your priority, option 1 (renovate and STR/MTR) likely offers the highest upside. If you value simplicity and future flexibility, consider selling and reallocating through a 1031. Given your limited cash and high DTI, refinancing after boosting rents might balance risk and reward best. Plan carefully, and you'll set yourself up for success!

Hope this helps!

Hey @Emira K.,

Buying, renovating, and selling is a great strategy, but here are a few things to consider:

1. Start with the Numbers: Make sure you know your ARV (After Repair Value) and work backward to calculate your budget, including purchase, renovation, holding, and selling costs.
2. Financing Blindspots: Even if you’re buying in cash, plan for potential delays or overruns in renovation costs. Having a contingency fund is key. Also, consider the impact on your liquidity—ensure you won’t need that cash elsewhere during the project.
3. Off-Market Deals: These can offer better margins. Network with wholesalers, check public records, and use platforms like PropStream or DealMachine to find distressed properties.
4. Be Cautious: Pay attention to permits, inspections, and local market trends—over-improving for the area could hurt your profits.

Starting with a solid plan and realistic numbers will set you up for success. Good luck with your upcoming flip!

@Sharon Porter,

Investing in a state-controlled property like this can be an opportunity, but it's critical to understand the legal and logistical nuances. Here’s a deeper look:

1. Legal Framework: The state likely took control due to unpaid MassHealth bills, which means there may be liens or claims on the property. Ensure the state provides a clear title upon sale. If not, you’ll need to resolve these liens, which could complicate the investment.
2. Current Occupants: The family living in the property could be protected under Massachusetts’ tenant and housing laws. Evicting them, even after purchase, could be a lengthy and costly legal process. If they qualify as tenants, you might need to honor tenant rights or negotiate a settlement to vacate.
3. Market Potential: A two-family home and a single-family unit could be a great income-generating property post-rehab or resolution. However, calculate whether the investment—purchase price, legal fees, potential eviction costs, and rehab—still leaves room for a solid return.
4. Risk vs. Reward: Assess whether the uncertainty surrounding the current occupants, title clarity, and liens aligns with your risk tolerance. Some investors thrive in these situations, while others prefer clearer paths to ROI.

Before proceeding, consult with a real estate attorney and conduct a title search to uncover any surprises. With the right due diligence, this could be a valuable investment, but only if you’re prepared for the legal and logistical hurdles.

Good luck and blessings!

Hi @Sean Gammons,

Great question! 

Buying two rentals in one year can be a challenge, but there are creative ways to make it happen:

1. House Hack the Duplex: Buy the owner-occupied duplex first. Once it's rented, use that rental income to help offset your DTI, which may help you qualify for the second property sooner.
2. Partner with Investors: Team up with someone to split costs and lower your personal DTI impact. It's a great way to grow faster.
3. HELOC or Equity Tapping: If you have equity in another property, using a HELOC or cash-out refinance could help cover the down payment without affecting your DTI as much.
4. Seller Financing or Creative Deals: Look for sellers willing to finance directly, which bypasses traditional mortgage qualification hurdles.

Scaling quickly often involves combining strategies—play around with what works best for your goals. Good luck building your portfolio!

@Tar-U-Way Bright,

Congrats on taking the leap into real estate investing! Using your LLC is a great way to structure and grow your business. Here are a few tips:

1. Asset Management: Holding your property in the LLC can protect your personal assets, but check with an attorney or CPA to ensure it's set up correctly and complies with local laws.
2. Rent Collection: Collecting rent through the LLC simplifies accounting and keeps personal and business finances separate, which is a big plus for taxes and liability.
3. Property Management: Since you're self-managing, the LLC can be used to formalize agreements, pay vendors, and manage expenses—treating it like a professional operation.

Just make sure to consult an attorney or accountant to align your setup with your goals. Starting out this way shows you’re serious about scaling your business!

Hope this helps you on your journey

Hi @NA

*I am not affiliated with Sodt Pull Solutions*

To perform soft credit pulls on potential borrowers, services like Soft Pull Solutions can be highly effective. They provide real-time access to credit reports from major bureaus—Experian, TransUnion, and Equifax—without affecting the consumer's credit score.

Setup Process:

1. Application Submission: Complete a formal application through Soft Pull Solutions.
2. Documentation: Provide necessary documents, such as proof of business operations and compliance with legal requirements.
3. Website Review: Undergo a review of your business website to verify services and permissible purposes for pulling credit reports.
4. Onsite Inspection: An inspection of your business premises may be conducted to ensure secure handling of credit information.

This process ensures compliance with legal standards and typically takes a few days to complete. Once approved, your business can promptly begin running soft credit pulls on clients.

For more detailed information, you can refer to Soft Pull Solutions' guide on setting up business credit report access.

@Devon Shives,

Your situation has a lot of potential, but here’s a thought: A cash-out refi could work if you’re confident you can use the $30-35k effectively for your next property, but the higher rate and payment might indeed limit your borrowing power for another mortgage.

Consider these alternatives:
1. Save the low rate: Keep your current loan and focus on building savings for the next down payment through budgeting or a side hustle.
2. Partner with an investor: If DTI and income are concerns, partnering with someone who has better qualifications could help you scale faster.
3. Creative financing: Explore seller financing or subject-to deals for your next property, which often require less upfront cash and bypass traditional lending limits.

You’re on the right track thinking long-term—house hacking and leveraging your duplex are great moves. Keep building momentum, even if it takes small steps!