All Forum Posts by: Felipe A.

Understood, thanks all. I thought there might have been another option to pay off the 2nd/HELOC, but this makes the most sense. Appreciate the advice.

Thanks, Linda. My question, though, is since I'm dealing with SFH/MFHs, that annual net income is not big money ($2-4k per year). If I'm holding some of that in reserve, it seems like a long time to wait to generate the cash flow needed to buy another property. So, this gives me pause at my strategy to acquire multiple properties in the near term.

Thanks for the reply, Joshua. In theory, I would be using my HELOC because I lack the funds to secure a down payment. So, if I use $20k of my HELOC as down payment on a rental property, that $20k is now tied up in my rental property. If I want to move out of my principle residence (for whatever reason) in 6-8 months, I have to pay off that $20k...but with what funds if they are tied up in the rental property?

Gabe, precisely correct from what I understand. That brings me back to my prior question - I guess the only option is to pay off the HELOC. But, that defeats the purpose of using it to fund down payments on rental properties if I plan to move out of my principle residence in the neat term (within a few years).

Sorry for the lack of clarity. My intent is to get a HELOC on my principal residence and use that cash to fund a down payment for a rental property.

My moving scenario is if I move out of my principal residence by selling it.

John:

That's my recollection from a conversation I had with a broker a year ago about securing a HELOC. She informed me that it had to be paid off before (or alongside) the principal mortgage. I guess I will research HELOCs to see if there are HELOCs that don't require payment in full upon a move.

I am exploring opening a HELOC on my principal residence allowing me to make a nice down payment on properties down the road.

However, if I move, I have to pay off the HELOC before satisfying the mortgage on the old house. If I used $50k on a HELOC on down payments on rental properties, I need to pay off that $50k off. What is the common approach to paying this off? I don't believe I can refi the rental properties notes to account for this $50k b/c I will exceed LTV ratios. Thoughts?

Hello!  I'm a new RE investor and my strategy is buy/hold specifically in single and small multi family.  I'm working on business plan and long term strategy (1 year, 2 year, 5 year, 10 year out) and after using a cash flow calculator (Excel) in working out some scenarios, I'm wondering if I'm on the right track.  What is the best way to grow your portfolio assuming going the standard way of financing (20-25% down)?  

To keep things simple, let's say I'm considering 2 similar small single family units that cost $100k each.  Certain assumptions I'm making ...1.3% rent to purchase price rule, 50% operating expense.  In this scenario, cap rate in the 2-3% range and cash on cash return is in the 10-12% range.

Based on this scenario, I plan to take the cash flow proceeds from both properties into property 1's note to pay it down and my payment calculator calculates note fully paid in about 6 years.  Then, I'd take all the proceeds from property 1 and property 2 and apply to property 2's note.  The calculator says I'd pay #2 off in about 10 years.  So, 2 properties owned free and clear in 10 years.  After that, wash and rinse with 2 more properties.

Sounds great?  Sure, but all that time, my cash was tied up in these 2 properties and I'm not taking into account anything out of the ordinary like capex repairs, etc.  Is this the strategy for growth in a portfolio?  Or is the answer, "Felipe, you gotta use other people's money to buy more properties - economies of scale"?  Looking for guidance on this!

Thanks in advance!

Hi all!

I've been a BP podcast listener for a couple months now and I'm about half way through the podcasts!  I've always had an interest in investing in real estate and I've reached the point in my life where I'm finally ready/committed.  Been reading a lot of materials on this site as well as started my own collection of RE books based on recommendations from the forum and the podcasts!

I'm primarily focused on single/multi family properties.  I'm outlining my business plan as we speak with 1-2-5-10 year goals.  Goal #1 - acquire one property!  

I'll be seeing you around the boards!