All Forum Posts by: Frankie Woods

 Anytime!  And yes, most banks will want 70 - 80% Loan-to-Value for investment properties.  Therefore, if you want to get cash out of the property during the refinance, you're all in costs (e.g., purchase price, closing costs, rehab) must come in below that.

I use my positive cash-flow to fund more deals.  It's getting tougher to find deals that make sense in this environment.

I can vouch for @Peter MacKercher with STL Mogul and Frontier Property management.

This is exactly what I found. I was really bummed about the "owner can not own more than 3 properties" aspect. 80% LTV is quite good for investment-grade HELOCS. Navy Federal does not have this restriction, but will only go to 70% LTV on rentals.

HELOCs are variable. Some banks charge fees and tend to have lover APRs while others (e.g., US BANK) don't charge any fees but have higher rates. I would talk to other banks to get a better sense of what "normal" looks like. It's good to have the option for a HELOC.

Why don't you buy your first rental using traditional financing while you can?  Given there is a pretty high risk of interest rates rising, I would want to have as many fixed rate loans as I could.

Sorry if this was misleading. it is fairly easy to find a lender to refi as long as you bought the property right. You can generally perform a no-cash out refi immediately upon closing. If you want to do a cash-out refi, you'll need to season the property for 6 - 12 months depending on the bank. The key aspect is buying the property at less than 75% ARV.

@Mark S. that is correct.  I have 11 rentals that cash-flow about 3k / mo.  I recently added an additional rental that will increase my cash-flow by ~$1200 / mo.  I have a mixture of SFRs, which I purchased as primaries and turned into rentals upon moving.  I am a military member and thus move a lot, but I have recently started moving every year to take advantage of the generous owner-occupant financing terms.  I also have 4-plexes.  Each of the SFRs cash flow about $150 / mo after accounting for expenses.  The MFRs cash flow about $400 / month.  The depreciation more than eats up the cash-flow and significantly reduces my ordinary income as I have not broken the $150k annual threshold.  My effective tax rate last year was 5% due to that.  Depreciation is a magical thing if you can use it.  For my situation, doing the Roth conversion ladders now is a good time for me because my taxable annual gross income is so low.  I will most like cross that income threshold in the next few years and the benefit will greatly decrease.

@Mark S. I am maxing out both my Roth IRA and 401k. When I was younger, I invested in a traditional 401k as there wasn't a Roth 401k option then. I was able to save a considerable amount in that account by maxing my contributions as well as taking advantage of the GFC recovery. Now as I see my passive income trajectory, it makes sense to use the Roth Conversion ladder to get the traditional 401k funds into a Roth account.

By the way, I thoroughly enjoyed your thought experiment above!

You want to have a team in place in the state you are investing in that you trust.  The essential members of that team are a reliable realtor, property manager (preferably one that does in-house maintenance and rehab work), and lender.  These individuals must understand the nuances of out-of-state investing (e.g., being able to sign documents virtually), as well as have a great understanding of the market because they will serve as your boots on the ground (i.e., your eyes and ears for the property and market trends).  Best of luck! 

@Alexander Wardell provided some excellent advice.  There is a limit on the gift amount, but I'm also not sure what that is (I think it's $15k as well).  A 12% return is very generous, and I think your plan is a win-win for both you and your mom if you are able to cash flow with those terms.  If you are going the conventional route, you can avoid the gifting requirement by seasoning your mother's funds for 2+ months.  These means, the funds have to be shown on two banking statements with no "deposit" associated with it.  Also keep in mind that the definition of a gift would entail not providing your mother a rate of return.  Hence, to avoid any fraudulent-like activity, I would recommend either seasoning the funds or having her co-sign on the loan with you.