Loan question
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Loan question (by Jeff S [MI]) Dec 21, 2021 6:08 PM
       Loan question (by Nicole [PA]) Dec 21, 2021 6:28 PM
       Loan question (by Robert J [CA]) Dec 21, 2021 6:34 PM
       Loan question (by Ken [NY]) Dec 21, 2021 6:35 PM
       Loan question (by Busy [WI]) Dec 21, 2021 10:01 PM
       Loan question (by Busy [WI]) Dec 21, 2021 10:02 PM
       Loan question (by Jason [MI]) Dec 21, 2021 10:07 PM
       Loan question (by Busy [WI]) Dec 21, 2021 10:19 PM
       Loan question (by Sisco [MO]) Dec 22, 2021 4:35 AM
       Loan question (by myob [GA]) Dec 22, 2021 8:04 AM
       Loan question (by Roy [AL]) Dec 22, 2021 8:38 AM
       Loan question (by Jeff S [MI]) Dec 22, 2021 8:52 AM
       Loan question (by Phil [OR]) Dec 22, 2021 8:57 AM
       Loan question (by myob [GA]) Dec 22, 2021 9:18 AM
       Loan question (by Roy [AL]) Dec 22, 2021 11:03 AM
       Loan question (by myob [GA]) Dec 22, 2021 1:23 PM
       Loan question (by S i d [MO]) Dec 22, 2021 2:55 PM
       Loan question (by myob [GA]) Dec 22, 2021 3:05 PM
       Loan question (by 6x6 [TN]) Dec 22, 2021 3:39 PM
       Loan question (by myob [GA]) Dec 22, 2021 4:06 PM
       Loan question (by Jason [MI]) Dec 22, 2021 4:06 PM
       Loan question (by 6x6 [TN]) Dec 22, 2021 5:00 PM
       Loan question (by Ken [NY]) Dec 22, 2021 6:34 PM
       Loan question (by 6x6 [TN]) Dec 22, 2021 6:59 PM
       Loan question (by myob [GA]) Dec 23, 2021 7:46 AM
       Loan question (by Pmh [TX]) Dec 23, 2021 5:37 PM
       Loan question (by don [PA]) Dec 23, 2021 6:19 PM
       Loan question (by Ken [NY]) Dec 23, 2021 9:26 PM
       Loan question (by Ken [NY]) Dec 23, 2021 9:28 PM
       Loan question (by Ray-N-Pa [PA]) Dec 23, 2021 10:04 PM
       Loan question (by 6x6 [TN]) Dec 24, 2021 11:31 AM
       Loan question (by Eddie [KY]) Jan 8, 2022 3:32 PM
       Loan question (by Pmh [TX]) Jan 10, 2022 2:38 PM

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Loan question (by Jeff S [MI]) Posted on: Dec 21, 2021 6:08 PM

I may get a variety of responses but considering a refi and one lender has a proposal that I can bring 2 properties plus cash out for renovation work covering 2 or 3 properties under my main home as there is equity there. The upside a better rate on all the financing the downside my main house is at risk more than previously ... Not sure if the collateral will ONLY be the main home or at least one other being paid off is listed if they are considering that, probably a large factor to consider ...

This particular loan officer brought it up so more creative than most bankers seems to me ....

Anyone else been thru this ?

Loan question (by Nicole [PA]) Posted on: Dec 21, 2021 6:28 PM

I believe in managed debt to grow your business.

If you need to put up additional real estate in addition to your personal home, I'd lean towards a general no without specifics to change my mind.

If you do put up your home, can you afford to make the payments, no matter what?

Are you saying you will have 2 or 3 paid off properties while your residence covers the loan? If so, I wouldn't do that ... I'd take the two smaller loans .. easier to juggle two small payments if times get tough rather than one large payment. Easier to divest of one rental rather than your personal home.

Loan question (by Robert J [CA]) Posted on: Dec 21, 2021 6:34 PM

Most lenders play that game, giving you an easy loan on your primary residence. When I went to my bank for a real estate loan, they tried every way to give me a loan on the home I was living in. I told the banker I had six homes within throwing distance of the bank branch and they were all paid off with no mortgage. I wanted to either get a first mortgage or a line of credit. Since I wasn't living in those 6 homes, they didn't have a product to lend me money on a current owned rental, only a loan for the purchase of a new rental property.

Try not to get a loan on your primary residence. Save it for when you are in trouble and need fast cash.

Loan question (by Ken [NY]) Posted on: Dec 21, 2021 6:35 PM

No way would i ever put a mortgage on my house,it is paid off and will stay that way.If worse came to worst the bank can take rentals but not my personal residence

Loan question (by Busy [WI]) Posted on: Dec 21, 2021 10:01 PM

A whole different method of financing- credit cards. Zero interest credit cards, to be precise. Not for the forgetful, the overspenders, and probably not for those who donít want to spend a bit of time each week checking on the balances, tracking whatís expiring soon, and looking for new offers.

This is also a really good way to kill your credit score, albeit temporarily, and with purpose. When I wanted to get rentals, my husband wanted no part of it, and I had recently quit my job. He didnít want to use home equity in any way. OK, he just didnít want me to do this, period. But, Iíd had an 850 Transunion and Experian credit score for years, and I live in a community property state. Iím legally allowed to use his income, without his credit being pulled. He is required to get notification of the debt, because, in my state, the debt belongs to the marriage.

Now, when I started, banks were offering zero fee, zero interest, for fifteen months, back when the economy was tanked. Best I can get now is 3% fee, zero interest for fifteen months. There are threads on this forum about using credit cards for financing. It is definitely NOT for everyone. I had taken my excellent credit score all the way down to the high five hundreds with cash advances to purchase two homes, repairs/improvements to all four. Back up to bouncing between mid and low seven hundreds, not higher because I have a couple of cards with zero interest near maxed out. When one cardís low rate expires, I have to know where Iíll transfer to, lest I pay high rates. About half of my debt is at zero percent interest, and about half is between four and nine percent. Some of that personal loans to refinance the credit cards.

Husband is now very Ďon boardí with me having rentals, said just the other day he wishes HE had bought ones I had been trying to convince him to buy back in 2012! Haha! My personal life has gotten busier, so not acquiring more properties. My goal is to have all the credit card debt paid off before DH (dear husband) retires in a few short years. Should be able to meet that goal. Easily, if only one of my two older roofs needs replacing before then.

I agree with not mortgaging the personal home, if you can avoid it. ( My husband is a pretty smart guy, lol!)

Loan question (by Busy [WI]) Posted on: Dec 21, 2021 10:02 PM

Oh, and never use CC for both rentals and personal. Keep separate cards for rentals.

Loan question (by Jason [MI]) Posted on: Dec 21, 2021 10:07 PM

I guess what rate are you getting?

I have a heloc on my mortgage....2.75% no closing cost. 80% ltv

I have loc on 75% of appraised value by drive at 4% on a couple rentals

I am ok using my primary as collateral...I can always sell stocks..or house.. or what ever if need be but I have great positive cash flow --107.127.xx.xx

Loan question (by Busy [WI]) Posted on: Dec 21, 2021 10:19 PM

Jason, I have HELOC rate envy ;-)

Loan question (by Sisco [MO]) Posted on: Dec 22, 2021 4:35 AM

That you donít have sufficient cash reserves to renovate is concerning.

If you are going to add significant income by way of the renovations it sounds like a viable plan.

On the other hand, if renovations are not likely to increase your income significantly, you should consider selling and redeployment of your funds because the loan term will outlast your renovations.

Loan question (by myob [GA]) Posted on: Dec 22, 2021 8:04 AM

One of the biggest mistakes RE investors (real investors) make is not using every available piece of credit to GROW your plan.

When I hear things like I would never use my home for credit-- I cringe-- what does that say? I don't trust my investing? You have got to use your assets and get them working for you.

Now I'm not saying for ever and ever-- but once you get to your comfort zone-- now start zeroing out your debt.

Always sounds good that you have 100,000.00 in equity or I own my home free and clear. I get that. The plan you have is to get the money working for you-- not sitting.

Our parents did a disservice to us growing up about being DEBT FREE.

My first purchase I got every penny I had, $30,000.00 and brought a rental for cash-- dumb now that I think of that, rehabbed and re-fid for 70K and started buying more. over 80 at one time.

Loan question (by Roy [AL]) Posted on: Dec 22, 2021 8:38 AM

I have used my primary residence on numerous occasions in getting low interest loans (heloc) to build my business. I actually had no choice because without a W-2 day job, banks would not loan me a penny to buy any of the Class C and D dumps that I needed $5-$10K for. I have even used credit cards to buy houses with.

Now, if you use your primary residence for collateral, you need to be a good money manager and have the financial discipline it takes to pay down or pay off what you owe when the time comes. Just remember that anytime you borrow money, it is like digging a hole in the ground and if you dig that debt hole is too deep, you may not be able to crawl out of it.

Loan question (by Jeff S [MI]) Posted on: Dec 22, 2021 8:52 AM

Good responses everyone, I hear all that .... I have one more discussion with lender probably today but the proposal now fees a little too much, certainly comparing to Jason comments. The possible upside could have been no actual appraisal walk thru of my home but they are pulling that back. So shopping a bit more looks like. I am playing that game with zero rate credit cards as busy described and in a few years that should be all gone if I stay on track ...

Sisco I still have sort of expansion plans personal stuff that I am considering as part of renovation stuff. Bldg costs are still quite high and that big pole barn that I didn't build a couple years ago is at least (still) double now ... I do have reserves but prefer not to touch at least one of those sources ...

Loan question (by Phil [OR]) Posted on: Dec 22, 2021 8:57 AM

Might check into Rocket Mortgage. We did a refi 6 months ago- on a rental property--pulled cash out to pay of another rental mortgage. They require a LOT of documentation- and are a bit of a PIA with asking for more documents-- but got finance for under 3%. Increased our monthly cash flow, kept the total payoff time about the same. --73.11.xx.xx

Loan question (by myob [GA]) Posted on: Dec 22, 2021 9:18 AM

Roy that was good. I use the digging hole and when you see water coming in-- STOP DIGGING.

Phil nothing like the OL 30,000 page loan application. Took 3 days to fax over. Sent them a NOTE-- don't call me and say you lost page 4!!!!!!! and want a resend.

Loan question (by Roy [AL]) Posted on: Dec 22, 2021 11:03 AM


I know way too many young and some seasoned investors who ended up digging their own graves when the debt hole got too deep. Using borrowed money to pay full retail prices instead of wholesale was their biggest mistake.

Loan question (by myob [GA]) Posted on: Dec 22, 2021 1:23 PM

Roy I'm sure you remember Carlton Sheets. In our younger days we use to watch him and even now remember his students bragging-- "I brought this 10 unit apt building NO MONEY DOWN! -- my first deal" or "I brought 10 duplex's on my first deal".

My wife and I would look at each other and joke-- lets see this train wreck in a year or two. Of course we all know what happens.

As with our dig a hole example: dig to quick, without experience, allows the water to rush in and DROWN US!

Ray we purchased our first rental in 1986 a SFH. Did we run out and buy 10 more? heck no. Why? Cause we wanted to TEST the waters-- see if we liked it and if it (rentals) like us. Wanted to learn a little.

Loan question (by S i d [MO]) Posted on: Dec 22, 2021 2:55 PM

Absolutely do NOT put rental investing on your home. If your investments to date do not support themselves, then it is common sense that putting your home at risk is a terrible idea.

I used to be one of the most frequent, direct voices on this board regarding not borrowing money to invest. I've toned it down over the years for several reasons, but the general thoughts are still the same. Investments should carry themselves.

If you're going to borrow the money, borrow it against the property itself. If you can't, then that (usually) means there's something lacking with the idea. Banks will loan on good, low risk investments. That's why they want your home as collateral: they know you'll drive yourself to the breaking point before tossing them the keys, and in the meantime you'll keep it in good shape. They win either way.

All this to say, if that bank won't loan on the project, there are good reasons. Don't ignore their warning.

Loan question (by myob [GA]) Posted on: Dec 22, 2021 3:05 PM

I 100 no make that 1000% disagree with Sid.

There is no sound reason a compident person-- being one who has done his homework-- can't invest home equity in RE. Due diligence.

That is one wacky way of giving advice. EVERY successful RE investor has or had to borrow-- you can't get quantity without it.

Loan question (by 6x6 [TN]) Posted on: Dec 22, 2021 3:39 PM

I will admit that I know very little about getting loans, however, I have to wonder where your reserves are, and are you getting interest on them. If they are sitting in the bank then you are probably not getting much interest, and you are losing value of that reserve due to inflation. So, why not give yourself that loan, and make those monthly payments with interest to yourself? I am still learning about the financial world though, so I will follow.

Also, if the banker made the suggestion, I would be questioning it.

Loan question (by myob [GA]) Posted on: Dec 22, 2021 4:06 PM

Well 6 the "still learning" just ain't gettin it. You'll be old and decrepited and you'll still be learning. My dad would say this to you-- crap or get off the pot!!!!

I belonged to RAND in ATL back in 87. People who were on the BOARD-- were still waiting on the perfect deal.

Most here all started with nothing. If I lose -what do I go back to-- that's right nothing. Your not going to lose. You've read, you've studied, you have people here to guide you and care about you.

Lets all face it. Most had nothing in the bank-- but may have equity on their home place-- that equity is the same as money in the bank that's also not drawing any interest for you.

So is there really a difference between a savings account and equity in a home-- that's not used?

Loan question (by Jason [MI]) Posted on: Dec 22, 2021 4:06 PM

For me..

My reserves are my loc/heloc

I can't see keeping x amount in bank getting under 1%.. use your line of credit.. keep paying it down.. --107.127.xx.xx

Loan question (by 6x6 [TN]) Posted on: Dec 22, 2021 5:00 PM

myob, I see your point about the equity, so I guess there really is no difference there. What always enters my mind though, in these discussions, is the fact that you would be paying interest on a loan just to leave money sitting in the bank. Why do that?

Also, if you have 100% equity in your personal home, that means it is paid for, why jeopardize that?

Loan question (by Ken [NY]) Posted on: Dec 22, 2021 6:34 PM

6x6 exactly if you have a home paid for why jepordize that? I bet there are plenty of people who refied there house and bought rentals what can go wrong they say if tenant doesnt pay i evict them,until the governor tells them they dont have to pay and now they cant pay the mortgage on there home and now they are getting divorced because they promised the wife everything would be fine.I bet there are a lot of this situation in my state.There are no perfect deals.Most landlords have never talked to a truly desperate seller and that is where the deals are,sub 2 doesnt take much cash,using the credit card advances solves the problem if you have enough cash advances and the ability to make the payments.Hard money or a partner with the money solves the problem.Wholesale it if is a really good deal.Maybe i am not a good investor because i wont risk my personal house but i consider it nieve to think nothing could go wrong and i do have discipline which is more important to me

Loan question (by 6x6 [TN]) Posted on: Dec 22, 2021 6:59 PM

Thank you Ken. I guess that is really what it boils down to, what are you comfortable with. How much risk are you willing to take.

Loan question (by myob [GA]) Posted on: Dec 23, 2021 7:46 AM

6 don't understand your statement: you would be leaving money in the bank paying interest on it?

The HELOC is an open equity fund. You don't take it out - your draw on it. So if you need 10K for a RE purchase-- you take 10K out and pay interest on that. Same with a draw on a 401--- you borrow what you need and then start paying it back.

Ken nothing comes without risk. But it is risk/reward.


As in what if this happens or that happens. Just can't out guess every thing.

Loan question (by Pmh [TX]) Posted on: Dec 23, 2021 5:37 PM

most certainly I would borrow against equity in a refinance on my house to fund a down payment on a rental that generates 30% cash on cash returns. it makes no sense to me to pay off my home with 2.75% cost of $. for those of you who feel better owing no $ on your home. good for you. but best way to get ahead is use still historical low cost of $ it makes little sense to me to lock cash into a fully paid house,

Loan question (by don [PA]) Posted on: Dec 23, 2021 6:19 PM

Ken---If a creditor gets judgements against you they can get your house put up for sheriff sale to satisfy the judgement even if it was not based on a mortgage on that property. In my state of Penna., filing bankruptcy does not let you keep your home.

Loan question (by Ken [NY]) Posted on: Dec 23, 2021 9:26 PM

Don, not when your house is in a trust they cant

Loan question (by Ken [NY]) Posted on: Dec 23, 2021 9:28 PM

Don and i have never seen a bank in my state actually even get a judgment against someone let alone go after another house

Loan question (by Ray-N-Pa [PA]) Posted on: Dec 23, 2021 10:04 PM

Before answering your question what is your DSCR?

If they are not paying you 1.2 or better, smack yourself to wake yourself up and look at your properties for ways to increase your cash flow.

Now assuming your places are cash flowing nicely, then I would rather have debt on a rental than my own home. The interest is 100% deductible as a business expense if you do it from a rental. You don't get the full dollar for dollar reduction all the time on your primary home like you do on any rental property.

Loan question (by 6x6 [TN]) Posted on: Dec 24, 2021 11:31 AM

Ray, what is DSCR?

Loan question (by Eddie [KY]) Posted on: Jan 8, 2022 3:32 PM

I go with no but also hard to keep up with how much interest for each house when looking at profit for each. Find a small local back or credit union

Loan question (by Pmh [TX]) Posted on: Jan 10, 2022 2:38 PM

6x6: debt service coverage ratio. commercial lenders will require calculation to include not only principal & interest but also capex reserves, total divided by noib4i&d. I donít use that ratio to pencil out purchases. I use cash on cash returns. which I think most here do.

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