You are one of my favorite gurus on the subject! I closed on my first commercial real estate purchase on 06/28/2024. Yesterday, I entered escrow on a residential short term rental property, and I’m currently in negotiations for a long term rental property. My next one I may employ creative financing utilizing subject-to. Thank you for teaching us priceless techniques and investment strategies.
Peter, what you teach is very true. I did this myself starting with 60K 10 years ago, and now selling for 1.9M. If I had people like you teaching me the right way my profit would have easily been doubled. Knowledge is everything.
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1M - existing loan $300k=$700k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
This is a great info on Equity. Very well explained but you all need to remember. The interest rate is very high above 8.5% so leave it alone for now till it goes bellow 4.5% then you could use the equity
By taking out a home equity loan you could risk losing your home: Since your home is required as collateral, you risk losing it to foreclosure if you fail to make your payments on a home equity loan. High equity and credit score requirements: If you don't have at least 20% equity in your home or a good credit score, you may not qualify. Tapping into equity increases your overall debt and what you will owe your lender - both in principal and interest. The best way to buy property is by getting together with investors. Form you own investment group where people come together that have cash that they are looking for opportunities to invest and buy either rental properties where the structure is there or land than can be built on. Your personal home should not be touched it’s your safety net.
When you said equity can be obtained tax free it would have been proper to tell people it is tax free it is not interest free. A person might make income using their equity but maybe only for the banks. Losing closing costs paying more insurance and risking everything. I could only see using equity for real estate investments when the market is suitable and interests are low, very low.
@@wheelie642 Sure, borrowing money is not interest-free, but interest is not the enemy. It's the cost of borrowing money. But if you borrow money at 7% but get a return on that money of 20%, then you are MAKING 13% per year from that equity! Banks are not the winners in this equation; smart real estate investors are. It's a paradigm shift in the minds of many people to understand the power of borrowing money wisely.
Cover $600 HELOC cost through investment property cash flow ? WOW I’d have to find a diamond in the rough. Thanks for being transparent. Great content.
I see a bunch of people in these comments don’t understand the paradigm shift that can occur when using debt to your advantage as opposed to acquiring retail debt etc… seek knowledge in an accepting manner.
This's the best and most simplest explanation i have seen so far on how to use equity on real estate. I believe you can deduct the rental cost vacancy as an expense.. On a side note, i read somewhere that 90% real estate investors lose money when everything is factored in, including sweat equity.
Where did you read that? Real estate is the greatest investment vehicle on earth. You get appreciation, depreciation and income, all at the same time. There is no other investment on the planet that gives you that. None. Sure, you can go wrong by buying incorrectly, but that's why its best to hire expert consultants to help you.
@@CommercialPropertyAdvisors 80% of these comments are from a robot. If the username as a series of numbers at the end, its most like not a real person. Just FYI!
@@adamnonnenmacher7774 Thanks for the tip. What's crazy is that many of those comments from the "series-of-numbers" commenters are actually very real-sounding questions and comments! They don't seem like AI. But then again, that's what makes AI so concerning these days.
@@CommercialPropertyAdvisors I noticed that too but my name got numbers after it also. I think it may be a dash and some numbers. Hard to tell. Easy to tell if they immediately start talking about i have an agent, oh, who is that?, its so-and-so, the best, wow, thanks, i'll contact them... Annoying. Thanks for the video. As you said, buying correctly is what really makes or breaks it.
Great video! Quick note: when cashing out you don’t take 75% of equity , you go to 75% of homes value on the cash out. In your example you had new loan amount of $600k on $700k value.
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
@@MattTheMortgageGuy We all know the basic that's all require veriable income. My real Q is is there any loan that does NOT look at the income? Even at higher interest like 10%-12% HELOC is ok as long as no income verify and within 1 yr I can use the funds to finish remodel and then rent it out to pay off all loan fast! Just need to find a way to UN-TAP (get $ from) the $525k equity just sits there (for your eyes only but cannot use is what a wasteful resource, sad), pls help! My parents against me to sell it for 1031exchange and my sis wants portion of the proceeds and thus also against to sell it. HELOC is like a credit card, I may not need $525k that much but if the HELOC has more than $100k for quick remodel is ok but make sure no income require...
Peter, this video breaks down the process in a simple easy to understand manner which is the best I have experienced over the several years in Real Estate investing. Thank you for the information. You're Awesome!
Hi Peter. This is a great video with examples. However, I have some issues with the monthly cashflow. You had projected the monthly cash flow of approx $1800/month after paying the mortgage payment, Heloc interest-only payment, Insurance, maintenance, etc. However, we also need to account for the costs of a property management company to manage those 12 units. I am estimating a PMI of $600/per month which would bring down the cashflow to $1200/month which is quite less for a 12 unit Apartment complex. I should be able to make a cashflow of atleast $400/unit after all expenses. Additionally with regards to Heloc,you had estimated a Heloc interest of $2000/ month for Heloc, which is interest only, fluctuating rate based on Fedrate. The interest payment can go up depending on the Fed rates. What strategy do you propose to pay off the HELOC?
Thank you for breaking down what I have been playing around with in my head for a while. Very informative video. I would like to play with the numbers more is I was investing in a 20 unit apt. building instead of a 12 unit.
I did a small HELOC. I am paying on the interest for 10 years before it starts actually coming off the the loan. Thought it was kinda like a regular loan. Stupid me. That's what i get for not reading 20 pages of fine print.
That's not an issue if you invest those funds wisely. Interest-only loans are used by smart real estate investors all of the time. It can be a HUGE advantage because you don't have to pay down principle. Paying down your loan shouldn't be your goal. Your goal should be to maximize the profits you can earn from the money you borrowed.
If you did a HELOC you need to use that HELOC in place of your checking account which will ALWAYS satisfy the monthly HELOC payment as it decreases. Peter did not discuss this. He talks about using those funds to buy commercial property If your not there currently, direct deposit your income into the HELOC. Pay expenses out of the HELOC with the provided debit card, increasing your credit score and freeing cash flow as your bills are paid off. You should be debt free before investing into commercial property unless you have a great deal on the table
@@damme91 And with commercial real estate, you can make a net cashflow AND get a tax deduction. Learn more here: www.commercialpropertyadvisors.com/tax-advantages-of-commercial-real-estate/
The way a HELOC works is as follows: Home price $700K 75% of $700K is $525K Therefore $525K (75% of the FMV) minus $300K owed = $225K available on the HELOC
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
@@Ngan-zy9kd I know for sure that when applying for a First Lien HELOC, they qualify you just like a regular mortgage will. I'm not sure about Second Position HELOCs
@@weinvestcambiandomentalida2629 In short, your Answer means THE Y WILL QUALIFY U BASED ON INCOME (verifiable income), right? I'm looking for any loan/HELOC without income verify (no doc, mostly based on the value of the R.E has $1M equity and only wanna borrow HELOC like around $300k.FMV of the home should exceed $1.3m, - $300k 1s mortgage loan=equality is $1M, and only want to tap into 1st HELOC borrow out $300k or $200k for rehab, but property is vacant no income and awaits for rehab. Thanks!
Hello when you take equity and go for commercial property .after put the equity money on the down payment do you have to take 2nd mortgage for pay the commercial property or just the down payment make you have the commercial property.
Are you asking for advice on buying a home as a first time home buyer? If so, we teach how to invest in commercial real estate. There are other experts out there that help you navigate through buying a home, such as ruclips.net/video/IomfI_iF4EM/видео.html
Actually, lenders will typically only give you a HELOC for 75-80% of the appraised value of the property. So if you have a loan for 300k on a home worth 700k, then you can only get 225k out typically so the total does not exceed 75-80% LTV. You do not get to have 75% of the equity, you get 75% of the value.
And some Credit Unions will actually allow up to 95% LTV (although that is not recommended because keeping some equity is helpful in case of emergency and having to sell your house quick)
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
We paid off our house a few years ago, and now that we’re nearing retirement, it feels like a missed opportunity to let all that equity just sit there.
Yea, I wouldn't regret it if I were you. Beware the devil is in the details. I was a realtor I can't tell you how many 'investors' came to me to buy income property. They think the sales prices of real estate is ripe with rental income and the seller doesn't know what he has.. Don't buy it! pun intended. The payoff is long term. The seller marks up the price making it a long time before you make profits. In the mean time you deal with renters failing to pay, evictions and people causing property damage that you will never recoup and your loss of peace and sanity. The only winner is the bank collecting interest.
@@wheelie642 You, as the Buyer, have the power to find off-market deals and negotiation purchase prices that are low enough such that you, as the Buyer, are the winner from the very start. Sure, brokers may try to convince you to buy bad deals, but you have the authority not to "buy" into their persuasion. You make your money when you buy. And meanwhile, banks are not the winners, smart real estate investors are.
Brother, you are the best. I wish I had met you 24 years, ago. I would have been rich, now. I would not have made the mistake I did. I am paying for my ignorance and total lack of financial and real mortgage understanding, even though I actually had a real estate license and a mortgage broker certification, with which I've done nothing serious.
Great advice I am from south africa in cape Town I got r700000 in equity in my home wane take it out and build a 4bedroom duplex too rent out on my yard it Wil roughly cost me r500000 to do my rental income Wil be r20000 a month and I Wil pay the banks around r7000 a month my cash flow Wil be around r13000 a month I think it Wil work is building safe that's my question
hold on....regardless of your home equity amount, you still need enough income to repay the heloc. I may be mistaken but $85K annual income is not enough to pay back $950K in uequity
I’m in that process now and for some reason the time is right as the interest rate is possibly going to go down. I have a property in Puerto Rico and doing a cash out refinance now with the goal to use the money to build a one bedroom in the back of the property to use as Airbnb, and even if it’s just a regular rental, my location and amenities will allow me to comman the amount of my mortgage or more
@@CommercialPropertyAdvisors ohhh I will watch now! I told them that’s what I was going to use the money for, I’m not sure if I can use it to buy another property 🤔 Thnak you! I will hop back here or respond under that video after I watch
@@CommercialPropertyAdvisors I read the article and I think I’m in a different situation because I’m just adding in a room to my already existing home, ocean view and three mins from airport. Hosting pilots alone would get me where I need to be financially because it’s three mins from airport. Also, in the the cash out, my mortgage goes up from 1100 to 1780 taking out $60,000. I can afford 1780 without the added income so if the world shuts down, I can still rent it as a long term rental for $2000 and still be ok… what do you think
I don't know about anyone else but what I'm earing here is you selling you house back to the bank. In a way of a loan you have to pay that loan back to the bank.
Borrowing wisely from banks is a brilliant way to build wealth faster (than if you didn't borrow). Borrowing money is not a problem, it's an opportunity. This concept is a paradigm shift.
You can't take depreciation deductions on your primary residence; only on rental properties. If you acquire another rental property (thanks to your HELOC on your free and clear primary residence), then you can accelerate some of the depreciation using a cost seg, as explained here: www.commercialpropertyadvisors.com/cost-segregation-made-simple/
the hard part is to find someone to guide you in finding a good deal and you forgot to mention 10% managing fees close to 15,000 a year so the total comes to about 7000 a year after all expenses or or approximately $580 a month
I've heard many people say take your home equity to buy properties, I been apart of an investment group awhile listening to their teaching and finally got enough equity to take out and after taking $80,000 out thinking my mentor will be helping me to purchase my first rental property ☹ No, I was then told I didn't have enough income, which I knew my income was extremely low because of not being able to work much because of my health, but they was teaching that you would count the income from the property plus your W-2 income.
Sorry to hear that you aligned yourself with the wrong investment advisers. There are good pastors and bad pastors. Good doctors and bad doctors. And good commercial real estate advisors and not-so-good ones. Also, we specialize in helping our Proteges raise money too. You have enough money when you know how to find more money.
The total rent income of $158,400 per year on 1 million capital invested. The rental income return is 15.8% return per year. This annual return is so high and too good to be true. Is this a real case or just hypothetical number ?
That's the gross rental income, not the NOI. For 12 units to generate $158,400 per year in gross, that is $1,100 per month per unit, which is about normal for today's market.
It starts with targeting off-market sellers. The $1,000,000 12 unit multifamily properties exist when you focus on off-market deals. For example, outside of Charlotte, NC
Hey Peter, Just tell me onething..is it good to invest my money on a house or stocks considering the current market situation and the inflation in future etc..?
The better question to ask yourself is what you should do with the equity in your home? And as you discovered at the beginning of the video, you shouldn't do anything with it unless you have the right advisors to ensure you invest it wisely. I've only invested in real estate because it is the best investment vehicle on earth. It is the only investment that gives you appreciation, monthly income AND tax deductions, all at the same time. Plus, real estate keeps up with inflation. So inflation doesn't negatively effect real estate investors. So now you're question is whether to leave you home equity where it is, or to borrow against it and buy income producing real estate. As this video explains, buying a multifamily property (with the proper guidance), is a tremendous opportunity to get more from your home equity.
It may be very difficult, at this time, to obtain a HELOC when you are either in or just finished a bankruptcy. You'll need to focus on creative techniques as described here: ruclips.net/video/5hE0ll27oXY/видео.html
16:21 i couldn’t get the calculation for this number. I divided 0.07/12= 0.00583 and then did 700k and 300k and multiplied 0.00583 against those #s, multiplied that by 12 and didn’t get the 48k. *goes to mortg calculator* forgot the 30yrs term.
A HELOC is a Home Equity Line of Credit. A "Home Equity Loan" can be either a Line of Credit or a Fixed Rate Amortized Loan. Lines of Credit are better because they are more flexible.
Heloc loan interest rates are 9-10 percent. The roi in most RE investments are around 10 percent if you're lucky. If the investment investment doesn't work out, you lose your house. If it works out, you break even. 😅
Cash on cash returns can be 20% or larger on the right deals, in today's market. When done wisely, using a HELOC to acquire commercial real estate is among the smartest investments that people can do right now.
@@toddl.3454 Ahhhh, I see your confusion. Listings on LoopNet and CREXI are not where you find 20%+ CoC deals. They come from off-market. I just reviewed an off-market 12 unit apartment deal outside of Charlotte NC from one of my Proteges yesterday and he has it under contract for $83,000/unit. That one is even better than 20% CoC (if it closes).
@@toddl.3454 Perhaps ask AI to scrap every LoopNet and CREXI listing to provide that for you. The best deals, the deals we do, are off-market and are not listed.
Definitely NOT in Southern Cal. Here's an example a California Engineer buying a 24 unit in Kentucky: www.commercialpropertyadvisors.com/why-cali-engineer-got-24-unit-in-kentucky/
You take it out to buy a property. When that property has added value (5-years), you re-fi it. Take the cash to payout the original loan. Repeat the process and buy a second property. (Buy, Borrow, Die). As time goes on, you get more & more in debt. But your asset values are far outpacing that debt.
@@seoulmansupra "Save up and pay cash" is perhaps even more risky. The time it will take for you to save up the cash will be many years. During that time, your cash will erode due to inflation. Meanwhile, the people who own real estate benefit from inflation so while you're losing, those who used Debt wisely are gaining. Then, you realize that your goal keeps moving because you need to save up even more money than you originally expected so your timeline keeps getting longer and longer. The smartest real estate investors use Debt wisely to be able to acquire real estate now and then leverage that first deal to get the next one and the next one, as described by @mikep4869
No the HELOC calculation was not correct. Heloc is calculated by subtracting the remaining mortgage from the appraised value of the home. So in this example it would be 300,000 / 700,000 = 42.8 or 43%. Lenders will typically give you up to 80% of the homes value so then take the 80% - 43% and that leaves you with 37% which is 37% of the 700,000, so then may lend you $259,000.
Thanks for that explanation. And a few other commenters shared that some credit unions will do up to 95% LTV HELOCs, although I don't recommend someone pull out that much of their equity.
@@KevinP32270 VA loans are used to buy owner occupied residential properties. If you used your VA loan for a 2, 3 or 4 unit, the new term these days to describe that is "house hacking". The best video on that subject is found here: ruclips.net/video/b7Dx-b0zCuk/видео.html
I'm sorry i haven't quite understood the part when I'm supposed to pay back the mortgage......After all that i don't see the part When the Mortgage for the property is paid, I only see him see him talking about the 7% interest on it
That's done through a future cash out refinance of the multifamily property. The technique described on this video has made our Proteges a TON of money over the past 10 years. It is extremely powerful.
Every successful commercial real estate investor has a mentor. Get your mentor here: www.commercialpropertyadvisors.com/protege-program/
You are one of my favorite gurus on the subject! I closed on my first commercial real estate purchase on 06/28/2024. Yesterday, I entered escrow on a residential short term rental property, and I’m currently in negotiations for a long term rental property. My next one I may employ creative financing utilizing subject-to. Thank you for teaching us priceless techniques and investment strategies.
I am trying to learn. I sent a txt and signed up for mentor about a week ago. I never got a response.
@@senecacooper8049 We currently do not provide services in the state of New York
Do you provide services in NJ? Thx
Peter, what you teach is very true. I did this myself starting with 60K 10 years ago, and now selling for 1.9M. If I had people like you teaching me the right way my profit would have easily been doubled. Knowledge is everything.
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1M - existing loan $300k=$700k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
This is a great info on Equity. Very well explained but you all need to remember. The interest rate is very high above 8.5% so leave it alone for now till it goes bellow 4.5% then you could use the equity
Exactly
We are doing this for last 45 years .. life is so relaxing with this tactics ❤
By taking out a home equity loan you could risk losing your home: Since your home is required as collateral, you risk losing it to foreclosure if you fail to make your payments on a home equity loan. High equity and credit score requirements: If you don't have at least 20% equity in your home or a good credit score, you may not qualify. Tapping into equity increases your overall debt and what you will owe your lender - both in principal and interest. The best way to buy property is by getting together with investors. Form you own investment group where people come together that have cash that they are looking for opportunities to invest and buy either rental properties where the structure is there or land than can be built on. Your personal home should not be touched it’s your safety net.
Remember my words of wisdom at the beginning of the video, "Learn to use it properly or leave it alone!"
When you said equity can be obtained tax free it would have been proper to tell people it is tax free it is not interest free.
A person might make income using their equity but maybe only for the banks. Losing closing costs paying more insurance and risking everything. I could only see using equity for real estate investments when the market is suitable and interests are low, very low.
@@wheelie642 Sure, borrowing money is not interest-free, but interest is not the enemy. It's the cost of borrowing money. But if you borrow money at 7% but get a return on that money of 20%, then you are MAKING 13% per year from that equity! Banks are not the winners in this equation; smart real estate investors are. It's a paradigm shift in the minds of many people to understand the power of borrowing money wisely.
Cover $600 HELOC cost through investment property cash flow ? WOW I’d have to find a diamond in the rough. Thanks for being transparent. Great content.
Great point. You definitely need to find a diamond in the rough. It's one the keys to this technique.
I see a bunch of people in these comments don’t understand the paradigm shift that can occur when using debt to your advantage as opposed to acquiring retail debt etc… seek knowledge in an accepting manner.
Amen!
That’s because they haven’t learned the difference between assets and liabilities.
This's the best and most simplest explanation i have seen so far on how to use equity on real estate.
I believe you can deduct the rental cost vacancy as an expense..
On a side note, i read somewhere that 90% real estate investors lose money when everything is factored in, including sweat equity.
Where did you read that? Real estate is the greatest investment vehicle on earth. You get appreciation, depreciation and income, all at the same time. There is no other investment on the planet that gives you that. None. Sure, you can go wrong by buying incorrectly, but that's why its best to hire expert consultants to help you.
@@CommercialPropertyAdvisors 80% of these comments are from a robot. If the username as a series of numbers at the end, its most like not a real person. Just FYI!
@@adamnonnenmacher7774 Thanks for the tip. What's crazy is that many of those comments from the "series-of-numbers" commenters are actually very real-sounding questions and comments! They don't seem like AI. But then again, that's what makes AI so concerning these days.
@@CommercialPropertyAdvisors I noticed that too but my name got numbers after it also. I think it may be a dash and some numbers. Hard to tell. Easy to tell if they immediately start talking about i have an agent, oh, who is that?, its so-and-so, the best, wow, thanks, i'll contact them... Annoying. Thanks for the video. As you said, buying correctly is what really makes or breaks it.
Great video! Quick note: when cashing out you don’t take 75% of equity , you go to 75% of homes value on the cash out. In your example you had new loan amount of $600k on $700k value.
Thanks for sharing.
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
yeah- for conventional loan you’ll need verifiable income to do cash out refi
@@MattTheMortgageGuy We all know the basic that's all require veriable income. My real Q is is there any loan that does NOT look at the income? Even at higher interest like 10%-12% HELOC is ok as long as no income verify and within 1 yr I can use the funds to finish remodel and then rent it out to pay off all loan fast! Just need to find a way to UN-TAP (get $ from) the $525k equity just sits there (for your eyes only but cannot use is what a wasteful resource, sad), pls help! My parents against me to sell it for 1031exchange and my sis wants portion of the proceeds and thus also against to sell it. HELOC is like a credit card, I may not need $525k that much but if the HELOC has more than $100k for quick remodel is ok but make sure no income require...
Thanks for that information
What an amazing video. Thank you!
Peter, this video breaks down the process in a simple easy to understand manner which is the best I have experienced over the several years in Real Estate investing. Thank you for the information. You're Awesome!
You are very welcome! Thank you for commenting.
Hi Peter. This is a great video with examples. However, I have some issues with the monthly cashflow. You had projected the monthly cash flow of approx $1800/month after paying the mortgage payment, Heloc interest-only payment, Insurance, maintenance, etc. However, we also need to account for the costs of a property management company to manage those 12 units. I am estimating a PMI of $600/per month which would bring down the cashflow to $1200/month which is quite less for a 12 unit Apartment complex. I should be able to make a cashflow of atleast $400/unit after all expenses.
Additionally with regards to Heloc,you had estimated a Heloc interest of $2000/ month for Heloc, which is interest only, fluctuating rate based on Fedrate. The interest payment can go up depending on the Fed rates. What strategy do you propose to pay off the HELOC?
Thank you for breaking down what I have been playing around with in my head for a while. Very informative video. I would like to play with the numbers more is I was investing in a 20 unit apt. building instead of a 12 unit.
Hi Peter, in which market/area are you able to purchase a 1m 12-plex? That feels like a good deal!
$83,000 per unit is still common in many markets across America
Thank you! Great and clear info to undrerstand about HELOC!
Thanks for watching!
I did a small HELOC. I am paying on the interest for 10 years before it starts actually coming off the the loan. Thought it was kinda like a regular loan. Stupid me. That's what i get for not reading 20 pages of fine print.
That's not an issue if you invest those funds wisely. Interest-only loans are used by smart real estate investors all of the time. It can be a HUGE advantage because you don't have to pay down principle. Paying down your loan shouldn't be your goal. Your goal should be to maximize the profits you can earn from the money you borrowed.
If you did a HELOC you need to use that HELOC in place of your checking account which will ALWAYS satisfy the monthly HELOC payment as it decreases. Peter did not discuss this. He talks about using those funds to buy commercial property
If your not there currently, direct deposit your income into the HELOC. Pay expenses out of the HELOC with the provided debit card, increasing your credit score and freeing cash flow as your bills are paid off. You should be debt free before investing into commercial property unless you have a great deal on the table
It’s very interesting Video that I found today. Before taking a 1st step, it required a lots of calculation and thinking…😊
Like Henry Ford said, "Thinking is the hardest work there is, which is why so few people do it."
I think real estate benefits (especially with taxes) definitely outweigh those of stocks. This is tremendous knowledge!
Especially on days like yesterday! Real estate doesn't change rapidly like that.
If you have an isa you don't pay tax on stocks. I can't see much income coming from rental property now with all the extra costs now
@@damme91 And with commercial real estate, you can make a net cashflow AND get a tax deduction. Learn more here: www.commercialpropertyadvisors.com/tax-advantages-of-commercial-real-estate/
Thank you for this goldmine of information. Your videos are always on point and no unnecessary details.
Thank you for watching!
The way a HELOC works is as follows: Home price $700K
75% of $700K is $525K
Therefore $525K (75% of the FMV) minus $300K owed = $225K available on the HELOC
Bingo. Thanks for the comment.
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
@@Ngan-zy9kd I know for sure that when applying for a First Lien HELOC, they qualify you just like a regular mortgage will. I'm not sure about Second Position HELOCs
@@weinvestcambiandomentalida2629 In short, your Answer means THE Y WILL QUALIFY U BASED ON INCOME (verifiable income), right? I'm looking for any loan/HELOC without income verify (no doc, mostly based on the value of the R.E has $1M equity and only wanna borrow HELOC like around $300k.FMV of the home should exceed $1.3m, - $300k 1s mortgage loan=equality is $1M, and only want to tap into 1st HELOC borrow out $300k or $200k for rehab, but property is vacant no income and awaits for rehab. Thanks!
This is the video that made ocr tangible. Thank you so much
Anytime. Thanks for watching.
Great video !! Beautiful and total breakdown !! 🏁
Glad you liked it!
Thank you soo much for this. I learned a lot. Question, is your mentorship available for no-US students
We only mentor in the US and Canada
@@CommercialPropertyAdvisors I am interested in the real estate market in both mentioned places. Will I qualify?
Do you live in the US or Canada?
@@CommercialPropertyAdvisors No I do not, but I am interested in real estate purchasing in the US or Canada
Hello when you take equity and go for commercial property .after put the equity money on the down payment do you have to take 2nd mortgage for pay the commercial property or just the down payment make you have the commercial property.
Thank you for this valuable information. I just signed up for your program and look forward to your mentorship. :)
Awesome, thank you!
Woo this is a magnificent explanation of how use your HELOC to make more money. Thanks well appreciated.
What a great teacher!! I learn so much from you!!
Thank you very much! Happy to help.
What is a good rule of thumb 4 opting either options as a 1st time home buyer, timewise ?
Are you asking for advice on buying a home as a first time home buyer? If so, we teach how to invest in commercial real estate. There are other experts out there that help you navigate through buying a home, such as ruclips.net/video/IomfI_iF4EM/видео.html
Most credit unions give a high LTV, some as high as 95% for HELOC’s
Thanks for sharing. Credit Unions can be so helpful.
Very educative and simple to understand
Thank you for watching!
Are you talking about the USA market only.??? What about Canada.?? Any ideas....???
What about when the rates change on the heloc. What is the average time before you can pay back the heloc
Typically, the refinance of the multifamily property is 3 years. Usually, HELOC interest rates stay fixed for 10 years. Plenty of time!
Fantastic explanation! Thank you very much
You're very welcome!
Actually, lenders will typically only give you a HELOC for 75-80% of the appraised value of the property. So if you have a loan for 300k on a home worth 700k, then you can only get 225k out typically so the total does not exceed 75-80% LTV. You do not get to have 75% of the equity, you get 75% of the value.
And some Credit Unions will actually allow up to 95% LTV (although that is not recommended because keeping some equity is helpful in case of emergency and having to sell your house quick)
Do banks need verifiable income before they allow us take out this loan amount? Currently if my duplex sits there that needs money to repair due to bad tenants finally evicted out with massive remodel works that cost money but vacant units have no rental income so can I still able to get HELOC even it has more than $500k equity sits there (SF, CA duplex usually FMV over $1.1M *75% - existing loan $300k=$525k equity but it has strong eviction/rent control laws against LL... now finally evicted them out! Hate evil CA rental laws, pls advise b/c I need the equality to massive remodel it then rent it out for max ROI after evicted a bad tenant only pays cheap rents due to rent control laws during those yrs! Thank you!
We paid off our house a few years ago, and now that we’re nearing retirement, it feels like a missed opportunity to let all that equity just sit there.
I’ve been looking into it too. It seems like you can turn that equity into something that works for you, but the question is how.
@@Patrick-x1h That question is answered in this video! Your equity is a huge opportunity.
Yea, I wouldn't regret it if I were you. Beware the devil is in the details. I was a realtor I can't tell you how many 'investors' came to me to buy income property. They think the sales prices of real estate is ripe with rental income and the seller doesn't know what he has.. Don't buy it! pun intended. The payoff is long term. The seller marks up the price making it a long time before you make profits. In the mean time you deal with renters failing to pay, evictions and people causing property damage that you will never recoup and your loss of peace and sanity. The only winner is the bank collecting interest.
@@wheelie642 You, as the Buyer, have the power to find off-market deals and negotiation purchase prices that are low enough such that you, as the Buyer, are the winner from the very start. Sure, brokers may try to convince you to buy bad deals, but you have the authority not to "buy" into their persuasion. You make your money when you buy. And meanwhile, banks are not the winners, smart real estate investors are.
Thank you Peter.
No risk,no reward!👍🏻✌🏻
Although I would prefer to say that you can have great Rewards with very limited Risks when you know what you are doing.
Where can we find a building at 12 units?
All across America.
Brother, you are the best. I wish I had met you 24 years, ago. I would have been rich, now. I would not have made the mistake I did. I am paying for my ignorance and total lack of financial and real mortgage understanding, even though I actually had a real estate license and a mortgage broker certification, with which I've done nothing serious.
No guarantees in life .. enjoy life on the go .. health is also our wealth
The best time to buy commercial real estate was 5 years ago. The next best time is today!
Excellent presentation!! I will be reaching out to Peter
Great! Thanks for watching.
When you do a HELOC does your original home loan interest rate change?
No. The HELOC is a separate loan
Thank you Peter for this real estate education video!
My pleasure!
Hi peter what about parking structure?
Good info
Thank you for watching!
Thank you for a very clear operation of RE
You are very welcome. Thank you for watching.
Great advice I am from south africa in cape Town I got r700000 in equity in my home wane take it out and build a 4bedroom duplex too rent out on my yard it Wil roughly cost me r500000 to do my rental income Wil be r20000 a month and I Wil pay the banks around r7000 a month my cash flow Wil be around r13000 a month I think it Wil work is building safe that's my question
hold on....regardless of your home equity amount, you still need enough income to repay the heloc. I may be mistaken but $85K annual income is not enough to pay back $950K in uequity
Thank you Peter
Thanks for watching!
What if you dont have enough equity for the project you have in mind? Any strategies for that?
Of course! Check out this video: ruclips.net/video/TuL7sjVHi0o/видео.html
@@CommercialPropertyAdvisors thanks 🙏🏼
Great information!
Can I sell my current investment property and do a 1031 exchange into my current primary residence and then rent that out?
No. Your target property cannot be a property that you already own.
Awesome information Peter. Thank you 🙏🏽
I appreciate the compliment.
I’m in that process now and for some reason the time is right as the interest rate is possibly going to go down. I have a property in Puerto Rico and doing a cash out refinance now with the goal to use the money to build a one bedroom in the back of the property to use as Airbnb, and even if it’s just a regular rental, my location and amenities will allow me to comman the amount of my mortgage or more
Are you sure you want to build? Check out this video I just released: www.commercialpropertyadvisors.com/real-estate-development/
@@CommercialPropertyAdvisors ohhh I will watch now! I told them that’s what I was going to use the money for, I’m not sure if I can use it to buy another property 🤔 Thnak you! I will hop back here or respond under that video after I watch
@@CommercialPropertyAdvisors I read the article and I think I’m in a different situation because I’m just adding in a room to my already existing home, ocean view and three mins from airport. Hosting pilots alone would get me where I need to be financially because it’s three mins from airport. Also, in the the cash out, my mortgage goes up from 1100 to 1780 taking out $60,000. I can afford 1780 without the added income so if the world shuts down, I can still rent it as a long term rental for $2000 and still be ok… what do you think
You explained it so clear … thank you
Glad it was helpful!
Many condos under $100k walking distance to NRG stadium, Houston, where we will have 7 games during the 2026 World Cup soccer.
excellent very detailed explanation thank you peter
Thanks for watching
Now you got my attention, Sir.
Excellent!
Thank you Mr. Peter.
thanks for watching!
I don't know about anyone else but what I'm earing here is you selling you house back to the bank. In a way of a loan you have to pay that loan back to the bank.
Borrowing wisely from banks is a brilliant way to build wealth faster (than if you didn't borrow). Borrowing money is not a problem, it's an opportunity. This concept is a paradigm shift.
Hello Peter! Thank you for the very informative video. Is this applicable for Canada?
Yes, BUT ... it's much more difficult to generate off-market deals in Canada. You have to develop relationships with Brokers to get pocket listings.
@@CommercialPropertyAdvisors thank you so much for the reply and advice❤️
How do I find $1MM apt building with 12 units? I’ve looked at almost every city in the US and can’t find such a deal.
Detroit
Great video. Thank you so much!
Happy to help.
How can i use depreciate for the paid off priperty when i use it for rental property without taking out helok?
You can't take depreciation deductions on your primary residence; only on rental properties. If you acquire another rental property (thanks to your HELOC on your free and clear primary residence), then you can accelerate some of the depreciation using a cost seg, as explained here: www.commercialpropertyadvisors.com/cost-segregation-made-simple/
the hard part is to find someone to guide you in finding a good deal and you forgot to mention 10% managing fees close to 15,000 a year so the total comes to about 7000 a year after all expenses or or approximately $580 a month
Is it worth joining ur course if you are above 50
Absolutely!
I've heard many people say take your home equity to buy properties, I been apart of an investment group awhile listening to their teaching and finally got enough equity to take out and after taking $80,000 out thinking my mentor will be helping me to purchase my first rental property ☹ No, I was then told I didn't have enough income, which I knew my income was extremely low because of not being able to work much because of my health, but they was teaching that you would count the income from the property plus your W-2 income.
Sorry to hear that you aligned yourself with the wrong investment advisers. There are good pastors and bad pastors. Good doctors and bad doctors. And good commercial real estate advisors and not-so-good ones. Also, we specialize in helping our Proteges raise money too. You have enough money when you know how to find more money.
The total rent income of $158,400 per year on 1 million capital invested. The rental income return is 15.8% return per year. This annual return is so high and too good to be true. Is this a real case or just hypothetical number ?
That's the gross rental income, not the NOI. For 12 units to generate $158,400 per year in gross, that is $1,100 per month per unit, which is about normal for today's market.
Only problem is you need to have enough income to show that you are able to pay the HELOC payments before you can get approved for it
That is true. HELOCs are based on the borrower's financials, including income, credit score and loan application.
Which part of the country do you get a commercial multi unit property for 1 nill?? Also getting high rents- sign me up. I got cash!
It starts with targeting off-market sellers. The $1,000,000 12 unit multifamily properties exist when you focus on off-market deals. For example, outside of Charlotte, NC
@@CommercialPropertyAdvisors Hook us up. Get me in touch with the group that will sell these
Thank you!
You're welcome!
Hey Peter, Just tell me onething..is it good to invest my money on a house or stocks considering the current market situation and the inflation in future etc..?
The better question to ask yourself is what you should do with the equity in your home? And as you discovered at the beginning of the video, you shouldn't do anything with it unless you have the right advisors to ensure you invest it wisely. I've only invested in real estate because it is the best investment vehicle on earth. It is the only investment that gives you appreciation, monthly income AND tax deductions, all at the same time. Plus, real estate keeps up with inflation. So inflation doesn't negatively effect real estate investors. So now you're question is whether to leave you home equity where it is, or to borrow against it and buy income producing real estate. As this video explains, buying a multifamily property (with the proper guidance), is a tremendous opportunity to get more from your home equity.
@@CommercialPropertyAdvisors Thank you for your response!!
wow thank youuuuuuuuuuuuuuuu
Thanks 👍 Pete
You're welcome!
Excellent. Very organized but stop sayin OK
OK 🙂
Great video!!
Glad you enjoyed it! Thanks for watching!
Awesome thanks.
You are welcome!
Does this apply to Canada and US ?
Yes!
Can you do any of these methods if in a bk? Or after a bk?
It may be very difficult, at this time, to obtain a HELOC when you are either in or just finished a bankruptcy. You'll need to focus on creative techniques as described here: ruclips.net/video/5hE0ll27oXY/видео.html
16:21 i couldn’t get the calculation for this number. I divided 0.07/12= 0.00583 and then did 700k and 300k and multiplied 0.00583 against those #s, multiplied that by 12 and didn’t get the 48k.
*goes to mortg calculator* forgot the 30yrs term.
I am not quite following your question but am happy to help where I can
I noticed you didn't mention using a home equity loan, not the HELOC.
A HELOC is a Home Equity Line of Credit. A "Home Equity Loan" can be either a Line of Credit or a Fixed Rate Amortized Loan. Lines of Credit are better because they are more flexible.
I have a two family; lives in one and rent the other. How do I claim the rented unit as an investment or rental property
If your property is just one parcel, then you have an owner occupied property from a loan perspective, which makes obtaining a HELOC much easier.
Thank you
You're welcome
Heloc loan interest rates are 9-10 percent. The roi in most RE investments are around 10 percent if you're lucky. If the investment investment doesn't work out, you lose your house. If it works out, you break even. 😅
Cash on cash returns can be 20% or larger on the right deals, in today's market. When done wisely, using a HELOC to acquire commercial real estate is among the smartest investments that people can do right now.
@@CommercialPropertyAdvisors please post a listing where the cash on cash return is 20 percent. Any listing, any city.
@@toddl.3454 Ahhhh, I see your confusion. Listings on LoopNet and CREXI are not where you find 20%+ CoC deals. They come from off-market. I just reviewed an off-market 12 unit apartment deal outside of Charlotte NC from one of my Proteges yesterday and he has it under contract for $83,000/unit. That one is even better than 20% CoC (if it closes).
@@CommercialPropertyAdvisors im.not confused. I asked you to send me any listing that shows a 20 percent cash on cash return.
@@toddl.3454 Perhaps ask AI to scrap every LoopNet and CREXI listing to provide that for you. The best deals, the deals we do, are off-market and are not listed.
Is 1Mn commercial property of 12 units available in market?
Absolutely! One of our Proteges just put a 12 unit near Charlotte NC under contract for $990,000 last week.
How to help with your debt, take out a cash out loan (mortgage) that's bigger than your original... umm, don't think so.
is it okay to pay 100% cash for a property from HELOC?
Yes! Because that money is borrowed, it's not 100% cash :)
Can you do this in UK?
Yes
STOP IT! no matter how much equity you have! You need to have good credit to do ANYTHING that will help you.
I live in southern california. 1 Million 12 units?
Definitely NOT in Southern Cal. Here's an example a California Engineer buying a 24 unit in Kentucky: www.commercialpropertyadvisors.com/why-cali-engineer-got-24-unit-in-kentucky/
Why would someone want to take out a home equity loan to pay expenses and then pay it back?
You take it out to buy a property. When that property has added value (5-years), you re-fi it. Take the cash to payout the original loan. Repeat the process and buy a second property. (Buy, Borrow, Die). As time goes on, you get more & more in debt. But your asset values are far outpacing that debt.
@@mikep4869 yeah that sounds like a risky way of doing it.
Save up, pay cash.
@@seoulmansupra "Save up and pay cash" is perhaps even more risky. The time it will take for you to save up the cash will be many years. During that time, your cash will erode due to inflation. Meanwhile, the people who own real estate benefit from inflation so while you're losing, those who used Debt wisely are gaining. Then, you realize that your goal keeps moving because you need to save up even more money than you originally expected so your timeline keeps getting longer and longer.
The smartest real estate investors use Debt wisely to be able to acquire real estate now and then leverage that first deal to get the next one and the next one, as described by @mikep4869
You're right! This is terrible.
@@mrcmid9132 Are you referring to our comment about sharing why saving up and pay cash is even more risky?
16:24: why have taxes and insurance on the Apt building not deducted from the NOI?
The $48,000 Expenses line item includes the taxes and insurance.
No the HELOC calculation was not correct. Heloc is calculated by subtracting the remaining mortgage from the appraised value of the home. So in this example it would be 300,000 / 700,000 = 42.8 or 43%. Lenders will typically give you up to 80% of the homes value so then take the 80% - 43% and that leaves you with 37% which is 37% of the 700,000, so then may lend you $259,000.
Thanks for that explanation. And a few other commenters shared that some credit unions will do up to 95% LTV HELOCs, although I don't recommend someone pull out that much of their equity.
Grateful 🙏
My pleasure
if I do cash out I'm going to have to pay higher payment on $700000 by your example and i can't afford that payment
The income from the 12 unit multifamily property is what more than pays for the $700,000 Line of Credit monthly payment.
That work great. But not in today’s market with crazy high prices and super high interest rates. Maybe next year when crash 😮😮😮😮
Are you sure? Check out this video: www.commercialpropertyadvisors.com/waiting-for-rates-to-drop-to-buy-commercial-property/
Thank you sir God blessyou
Thanks for watching!
How the proposed tax on unrealized capital gain could affect the economy and us?
I seriously doubt that will ever see the light of day. No need to ponder what it would do.
THANKS!
Thanks for watching
@@CommercialPropertyAdvisors do you have videos on how to use the v.a. guaranteed loans to buy a duplex or commercial property?
@@KevinP32270 VA loans are used to buy owner occupied residential properties. If you used your VA loan for a 2, 3 or 4 unit, the new term these days to describe that is "house hacking". The best video on that subject is found here: ruclips.net/video/b7Dx-b0zCuk/видео.html
@@CommercialPropertyAdvisors THANKS!
What if your home is only 150,000
I'm sorry i haven't quite understood the part when I'm supposed to pay back the mortgage......After all that i don't see the part When the Mortgage for the property is paid, I only see him see him talking about the 7% interest on it
That's done through a future cash out refinance of the multifamily property. The technique described on this video has made our Proteges a TON of money over the past 10 years. It is extremely powerful.
@@CommercialPropertyAdvisors Do those rules apply in every country or is just America?
@@raheemzumo2179 We only understand the rules of the US and Canada. We are unaware of how any of this works in other countries.
Pl tell me, I am struggling. I am 62 years old. I am working 2 jobs. Still can't make ends meet. Please, please help.