I was wondering if anyone has tweaked the BRRRR strategy for their primary home?
I don't really understand what you mean....
The best "tweak" I know for a primary residence is to use a FHA 203k loan. This will allow you to buy a fixer upper and finance the rehab cost, while only requiring a 3.5% constribution from you.
Not only do you get to create equity from the rehab, but you also get to live in a brand new home, which you can sell capital gains tax free in 2 years. It's a pretty sweet deal
I agree with what Michael is saying the 203k loan is an awesome option that I overlooked when buying my primary home (a friend of mine used it and had great success). However, I believe that the 203k requires some specific contractors to do the rehab. So if you are into doing some projects yourself, it may make sense to refi and pull out your capitol. There are still 5% down loans out there so the cost to entry is low, do the rehab yourself (cheaper than a hired GC), and refi out your downpayment and all the cash used for the rehab. This seems to be the best way if you are low on cash.
If you are not low on cash, do a 20% down loan, do the rehab, and then pull out a HELOC if you want to keep your cash rolling on other investments. That way your monthly mortgage (and the interest you are paying) doesn't increase but you access to the equity in your home (some banks are giving up to 95% LTV). Seems to be a cheap way to get money without pulling 401k or other retirement streams.
@Michael Ablan Looks like you understood what I meant :) I meant whether anyone has tried to buy a fixer upper with hard money loans. Fix it up, build equity and refinance.
Yes this is my plan for our "dream home". It's no different than BRRRR. or Fix n Flip.
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