Lake Elsinore, CA · Member since 2018 · 235 posts · 300 votes
Can you talk about in what condition you are buying properties, and how are you buying them?
I really want to go down this road for my next investment but it seems a lot of the properties I see that would be "BRRRR-able" are cash purchases.
Are you buying properties so distressed they are cash purchases? In order to get your money out, assuming you have your financing fixed, it seems there needs to be a big upside. I'd love to say I have enough cash to buy more houses in cash, but I don't.
Would love thoughts/feedback on what you look for if BRRRR is your focus.
Rental Property Investor · Drums, PA · Member since 2017 · 345 posts · 365 votes
7y
@Courtney M. I’ve got 3 young daughters and I try to involve them as much as I can in our real estate business. Here’s why I’m telling you this. When I go to view properties I often bring the kids. They’ve gotten to the point that when we walk into a perspective property and It’s disgusting and stinks, I asl them what they think. Their response, “Smells like money Dad!!”
So, I’ve found success with making cash offers on homes that primarily require cosmetic fixes. I’m buying these anywhere from 20-50% below market value. We renovate, rent and refi our cash back out usually within 6 weeks.
Find the next property, and do it all over again. We started about 1.5 years ago and we’re (my wife and I) currently working on #11.
Let me know if you have any questions regarding the specifics of BRRRing
Best of luck!!
Real Estate Broker · Detroit, MI · Member since 2014 · 384 posts · 149 votes
7y
@Courtney M. Once you have developed relationships with traditional and private lenders who know what you can and can’t do. Which market(s) are you looking to invest?
Waipahu, HI · Member since 2018 · 121 posts · 81 votes
7y
Some great insight on BRRRRing. I really appreciate it. I am in the process of building up funds, analyzing deals, reading books, networking, and hoping to start BRRRRing Summer of 2020 along with a house hack. I have been running numbers on deals for practice, but estimating rehab cost is difficult for me. I am looking forward to J.Scott's updated book on estimating rehab cost, and it is on my reading list. Would it be possible for some of you to give a rough estimate on this house? The house would appraise for around 95k when all fixed up, it would also rent around 1000 a month. Given a rough estimate on rehab cost, what would you offer on this house to come close to the 70 percent rule? What are some pitfalls to avoid on this property? I know this is a difficult exercise given the limited amount of information on the listing, but I believe it is still beneficial to newbies like me.
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
7y
@Courtney M.
I look for houses that are in the middle of moderate and total rehab. I set my rehab limit to $35,000. When I purchase a house, my LTV will be between 50-65%. I do my own work and if I use a contractor, I’ll buy the materials to cut costs. I try to put in 3-6 months worth of work, I try to make sure my new investments are in the best condition before renting them.
Stockton, CA · Member since 2017 · 19 posts · 4 votes
7y
What lenders are you all finding to get your cash out? I purchased a property in Shreveport, LA for 20k in cash earlier this year, we put 20k in rehab costs. My realtor stated we could put it on the market for $105k but now I am thinking of holding on to it and renting it out. The banks I have contacted have only offered me a line of credit, is that what everyone is getting their cash out as or a first loan on the home? Really interested in getting our money out to do some additional investments just need to be pointed to the right direction when looking to banks.
@Courtney M. I’ve got 3 young daughters and I try to involve them as much as I can in our real estate business. Here’s why I’m telling you this. When I go to view properties I often bring the kids. They’ve gotten to the point that when we walk into a perspective property and It’s disgusting and stinks, I asl them what they think. Their response, “Smells like money Dad!!”
So, I’ve found success with making cash offers on homes that primarily require cosmetic fixes. I’m buying these anywhere from 20-50% below market value. We renovate, rent and refi our cash back out usually within 6 weeks.
Find the next property, and do it all over again. We started about 1.5 years ago and we’re (my wife and I) currently working on #11.
Let me know if you have any questions regarding the specifics of BRRRing
Best of luck!!
Realtor · Shreveport, LA · Member since 2012 · 311 posts · 58 votes
7y
@Mariela... We have done quite a bit of this same strategy you are looking to put into play in the Shreveport, LA area. I completely understand your question or frustrations that banks are not offering what you would expect and I too have been down this path.
From my perspective...I would change your approach when contacting lenders. I would take the approach of inquiring what metrics (LTV, terms, seasoning, etc...) they would lend on (basically gathering data. Maybe rephrase your back story to something like... I have a property that has substantial equity based on the current valuation and am looking to complete a cash out refinance on that property. I intend to use the funds from the refinance to acquire additional properties. Does your bank work with investors that are in my situation?
Also, from my experience... Lenders want to know about your character, your capacity to repay the loan, capital, the collateral in that particular asset (as well as globally) and conditions. Other questions might include... your investing experience, operationally how are you going to manage the property (or are you going to hire it out), they might question your team and so on...
If your agent works with investors regularly he/she should be able to recommend to you local lenders that would be able to satisfy your needs.
@Henry Washington
This is interesting, you are buying the house in full with a construction loan? What are the terms like?
Usually 3-12 months interest only payments, at whatever the current interest rates are. Then the loan converts to a traditional once the construction period is up.
@Mariela De Leon, I just spoke w/a loan officer at a local bank in Bossier last week. He's able to do mortgages or refi, if I'm not mistaken, up to 80% of the ARV on investment property. That amount on $105k may help you out. Feel free to send me a message and I'll get his information to you.
Rental Property Investor · Austin, TX · Member since 2015 · 280 posts · 176 votes
7y
@Mesha R. I am an investor in the Bossier area and have a BRRRR project underway. did the loan officer you spoke with indicate if the 80%ARV refinance was a 'Cash Out Refinance' or just a traditional refinance? If it was a Cash Out Refinance, I'd love to have his information!