Starting to Invest using Buy Rehab Rent Refinance Repeat (BRRRR)

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Starting to Invest using Buy Rehab Rent Refinance Repeat (BRRRR)

Joseph Heimann
Eau Claire, WI · Member since 2018 · 8 posts · 0 votes

Hello All,

I'm a relatively new investor, owning one single family in Texas that I am currently renting out. After travelling Asia for 6 months, I am now back home in Wisconsin and looking to get more property. I have a few problems regarding financing.

 I just started working a "part-time" job (50hrs/wk) and this doesn't exactly make it easy to get financing for a house. Banks don't seem to like the part-time aspect of the job and I have only been working there a short time as well. This is the main hurdle as my credit score is around 800 and I can get enough for a downpayment.

Now, I would like to BRRRR. If we assume that I can find private money to get the first property, how would I go about doing the "Refinance" portion? I'm assuming I would run into the same problems that I am currently seeing in financing. Any suggestions on how to address this problem?

I currently have a few properties I'm looking at, and trying to get the private money needed. I just don't want to be stuck in it with no way of getting the money out.

Thank you for the help!

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Brian Garrett
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y

You would need to use a commercial/portfolio loan for the refinance.

You won't qualify for a conventional Fannie/Freddie loan without the job.

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  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    8y

    You would need to use a commercial/portfolio loan for the refinance.

    You won't qualify for a conventional Fannie/Freddie loan without the job.

    1Reply
  • Samuel Bavido
    Investor · Stevens Point, WI · Member since 2017 · 77 posts · 31 votes
    8y

    Wow, we're oddly similar investors; I own a rental in Oklahoma, recently moved to Wisconsin after 9 years in Taiwan! 

    Where in Wisconsin are you? I'm in Stevens Point. 

    I got a refinance loan through River Valley Bank in Wausau for a duplex; 20% down ($10,000) to purchase and rehab. We're (hopefully!) about 3 months out from the re-fi on that one. It was a commercial loan; I was able to get friends and family money at 8% (interest only) for one year for the down payment. 

    We also closed on our primary residence just a month ago. WHEDA is for your first primary residence; since the property in Oklahoma has always been a rental, we qualified for 100% financing. That's an option for you to look in to once you get a full time job. 

    Honestly, at this point, I'd focus most on the full time job. Once you have that, start looking for a 4-plex to house hack. That's a great place to start. 

    0Reply
  • Scott Schultz
    Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
    8y

    the key is to buy with enough upside after repaired to get all your money back and enough equity to weather a correction. you will be seeking a small locallender that will hold in house, or on the commercial side, but with that the terms are usually 3, or 5 years generally. this puts you at a rate and equity  risk if the market tanks when the refi is required. just plan for it and you will be ok. Some small banks can still do loans if you have assets great credit, but not so verifiable income. Depends how they quantify the Dodd Frank "ability to repay"  knock on a lot of doors, you will get a lot of no's but you only need 1 yes

    0Reply
  • Tim Ryan
    Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes
    8y
    Joseph, you have hidden info about yourself. I wondering where in WI you live. I’d like to network with you and tell you what I’m up to (no sales, but I do have a purpose). Message me.
    0Reply
  • Joseph Heimann
    OP
    Eau Claire, WI · Member since 2018 · 8 posts · 0 votes
    8y

    Thanks for all the great advice. I'll be talking to lenders early next week and was wondering if you had any tips for me? What to say/not to say?

    Also, do you recommend making an appointment to go in and talk or just talk on the phone? 

    I'm located in the Eau Claire area but I'm also looking for rentals in Chippewa Falls and La Crosse. 

    0Reply
  • Account Closed
    Investor · Eau Claire, WI · Member since 2014 · 33 posts · 13 votes
    8y
    I’m also in Eau Claire and can give you some recommendations! Pm me to connect!
    0Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    8y

    Hey @Samuel Bavido, no offense but I don't understand your strategy. I'm sure you're more experienced than me but the BRRRR plan is based on using CASH to purchase the property (you didn't have cash), you needed more to rehab (you took a loan for this), and then you refi. What's the upside to taking these loans instead of saving for a CASH purchase?? 

    That's a lot of risk in my opinion.  

    0Reply
  • Samuel Bavido
    Investor · Stevens Point, WI · Member since 2017 · 77 posts · 31 votes
    8y

    BRRR is not a cash exclusive strategy. It works with cash or OPM. Buy (by whatever method), rehab (does not matter what kind of money you use), rent, refi, repeat.

    Is there more risk to doing it with OPM? Of course. Why do it? Because the property was a good deal, and I didn't have 50k in cash sitting around. It's a level of risk that I'm willing to accept. If you are not comfortable with that level of risk; fine. Don't be pressured into assuming risk you are not comfortable with. But don't pressure other people into accepting your personal risk tolerance as some sort of gold standard for acceptable risk. 

    0Reply
  • Beth Stanley
    Residential Real Estate Broker · Eau Claire, WI · Member since 2011 · 21 posts · 3 votes
    8y

    Hi all, I'm a flexible independent Realty Broker in Eau Claire having helped cash investors including family members invest in fixer uppers, rehabs,  turning them in to a flip or rentals for 10 years now.   Exciting to see our many kids learn the rehabbing trades and utilize them on other customers' projects too.   Love seeing their finished houses.  

    0Reply
  • Kelly A.
    Wholesaler · Eau Claire, WI · Member since 2014 · 133 posts · 32 votes
    8y

    Hello! Do you wanna know which banks are investor friendly in the Eau Claire area? Lemme know. I know a couple good ones.  

    Kel

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