First investment property

3 Replies

Hello all, I am active duty military and currently reside in Japan. I currently have a town home I am renting out, which I obtained using my VA loan. I now desire to purchase an investment property to make a rental for additional income. My question comes to financing. I estimate to spend approximately 50k all together, but I am concerned with how to fund the purchase. I would love to have instant equity and a positive cash flow by purchasing a home at auction. However, with a current mortgage and the desired home being an investment property I don't know where to go for financing. I have 15k cash, but would rather save the money and finance the property. Any easy to understand financing options would be greatly appreciated.

@Timothy Colman

Hi Timothy,

Here's what I understand from your post :

You want to buy a property and rehab it for 50K all together. You have 15K but trying not to touch it. 

Here's a classic way to buy a home (no money down).

Let's say the home sells for 30K, there is 20K worth of rehabs and ARV is 80K.

Find a private lender (family, friends, colleagues, etc). Get a private loan for 50K (30+20).

BUY the home all-cash, REHAB it then RENT IT. After this, it should be worth 80K. Go to  a bank and get a traditional loan for 80% of its value through REFINANCING, which is 64K (80% x 80K). Get the 64K, payback the 50K + interest to your lender, keep the difference and then you have a cashflowing property with 16K equity in it that you bought with no money down. How fantastic is that?

I invite you to read this article regarding BRRR (Buy, Rehab, Rent, Refinance)

http://www.biggerpockets.com/renewsblog/2015/04/20...

Best regards,

Kevin

It sounds downright incredible Kevin!  I won't barrage you with questions until I have read the article you have provided, but can I do the same process with my own personal funds; i.e. Buy (my cash), Rehab, Rent, Refinance?  I would like to cut out the private lender if possible.

Also, I will have to research this refinancing when there is no mortgage.  I have refinanced in the past on a home that I lived in and had a mortgage on, but not when I own a home outright.  I honestly did not know that was possible.  Maybe my interpretation of refinancing is flawed...

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