New to the investor world. Plan on using the BRRRR method.
I'll be using funds from a HELOC on my primary for a cash purchase and to pay for rehab.
My question is, once I refi after the rehab is complete, I use those funds to pay off my HELOC balance I used to purchase and rehab, correct? I would then have the HELOC money plus excess equity (leftover from refi) available to use again to purchase another property, correct? I would then have a HELOC and conventional loan to pay back (from tenants of course), correct? Just repeat this as many times as possible?
If I have this wrong, please correct me because I am somewhat confused by this part of the process.
@Fred Buechel the refi pays off all loans and repays you all cash used in the purchase and rehab. So you have a new mortgage on the property, and a paid off HELOC to use again.
Sounds like what I thought.
So you just endlessly have loans, which are being paid off by the tenants, which builds equity, plus your monthly cash flow from each property, and all the while you’re accumulating more properties (compounding monthly cash flow) which is the name of the game.
@Fred Buechel absolutely correct!
@Fred Buechel There is a limit to how many loans you can have. However, there are ways around it.
Best of luck!
Would Forming an LLC and putting the houses in the entity's name be one way around it?
@Fred Buechel yes. You can have up to 10 conforming loans in your name. There is no limit to the number of commercial or portfolio loans