So, I'm new to real estate investing. I want the best bang for my buck and don't mind researching 100 properties to find 1.
I recently found a wholesaler in my area. Investwithben.com
Seems to be wholesale prices. Fixer uppers in many cases.
I've found a lender that has access to hard money for 12-24 months at 10-13% that will include rehab costs in the loan, then you 80% Cash Out Refi based on the ARV down the road into a conventional loan.
I've got some good leads on Rehab teams and Property Managers.
Is this a good plan? Find good deals, use my own cash/cash value/heloc for down payment, rehab, rent, refinance, repeat?
Lender · Tampa, FL · Member since 2023 · 22 posts · 6 votes
3y
Hi Joshua, in theory that's how it is done. I'm sure a few others will jump into this post and outline requirements for conventional loans - however, another option for the refinance is a DSCR loan. You should keep in mind when looking at deals, that max LTVs for DSCR cash out refinances are typically 75% LTV (& 80% if a rate/term). Furthermore, if you buy cash there are seasoning requirements. These range from 3-6 months based on the approach. Using the hard money lender for the purchase/rehab is a decent option if you want to ensure you have cash reserves, it also drastically reduces seasoning requirements - using "other peoples money" is a popular option to scale.
Lender · Tampa, FL · Member since 2023 · 22 posts · 6 votes
3y
Hi Joshua, in theory that's how it is done. I'm sure a few others will jump into this post and outline requirements for conventional loans - however, another option for the refinance is a DSCR loan. You should keep in mind when looking at deals, that max LTVs for DSCR cash out refinances are typically 75% LTV (& 80% if a rate/term). Furthermore, if you buy cash there are seasoning requirements. These range from 3-6 months based on the approach. Using the hard money lender for the purchase/rehab is a decent option if you want to ensure you have cash reserves, it also drastically reduces seasoning requirements - using "other peoples money" is a popular option to scale.
Hi Joshua, in theory that's how it is done. I'm sure a few others will jump into this post and outline requirements for conventional loans - however, another option for the refinance is a DSCR loan. You should keep in mind when looking at deals, that max LTVs for DSCR cash out refinances are typically 75% LTV (& 80% if a rate/term). Furthermore, if you buy cash there are seasoning requirements. These range from 3-6 months based on the approach. Using the hard money lender for the purchase/rehab is a decent option if you want to ensure you have cash reserves, it also drastically reduces seasoning requirements - using "other peoples money" is a popular option to scale.
Well I'm about leveraging OPM to get this rolling.
Investor · New Braunfels, TX · Member since 2021 · 11 posts · 8 votes
3y
You are on the right track with the general idea of how BRRRR works. The "trick" is to be very accurate with your rehab cost projections and expected rental rates. Most purchase + rehab will be too costly for rents in the area but if you know your numbers and look at enough deals there are great projects out there.
Real Estate Broker · Denver/Castle Pines/Colorado Springs, CO · Member since 2021 · 248 posts · 136 votes
3y
I would find someone local who has done it and ask to shadow them or at least have them review a deal you plan to pull the trigger on. That knowledge is invaluable. You may even have to pay a consultation fee but it is a much better idea than trying to do it on your own. Let us know how it goes!
Whenever taking on a fix and flip it is important to have an exit strategy. Depending on the lender you may be able to locate rates as low as 10.5% then refinance after seasoning (12 months). Do you have a property in mind? How much down payment would you be willing to allocate?