Full BRRRR in 9 weeks.

19 Replies

I've been posting on this forum for years, but this is the first deal I've felt like sharing.

We bought this house about 3 months ago

Purchase price: 38.5K

Rehab: 20K

All in: 58.5K

ARV: 78K

Loan: 58.5K 

Money left in the deal: ZILCH!

Rent: $850

I closed the HUD on March 14th and I closed the refi loan on May 18th. 

I used the delayed financing method to go so fast. If I had waited 6 months I would not have been able to pull out any additional cash so time became very valuable. 

Total process to rehab, place a tenant AND do the underwriting was just under 9 weeks total. 

I also do this entirely long distance from across the country. 

 A few keys to quickness: 

Your contractor should be ready to demo the day you close and own the property

Your lender should be included BEFORE you close on the house so he can make sure the HUD is optimal for extracting all your cash

I put the property up for rent about halfway through rehab, once it starts to have the GLOW of opportunity ;) 

overall it was pretty easy.  

Here are some before pics! This one was just a light rehab so not too exciting. (PS ALWAYS hire a pro photographer!)

AFTER: 

@Alexander Felice I thought delayed financing meant you where limited to get back only the purchase price + closing costs? You were able to get your reno money out of the refi it seems. maybe I'm missing something. house looks great for a quick reno. you must have a great team!
Originally posted by @James Clements:
@Alexander Felice I thought delayed financing meant you where limited to get back only the purchase price + closing costs? You were able to get your reno money out of the refi it seems. maybe I'm missing something.

house looks great for a quick reno. you must have a great team!

Common misunderstanding I think as I hear that all the time.

The rule is you can pull 75%LTV or 100% HUD whichever is lower.

The guidelines say NOTHING about what those funds itemize out too, it only states 100% of HUD

so load up the HUD! I included a picture of the hud on my blog post for detail. I added my year of insurance costs to upfront as well ;) ;)

I do have a great team, I'm incredibly grateful for them all. Building a team was not luck for me, all done through hard work and hiring lots of idiots, thieves, and disappointments before hand. Team building is a talent like any other, takes diligent practice to get good. Thank you!

@Alexander Felice Great information! Could you expand a bit further on the statement, "so load up the HUD!..." ? The link to your personal website/blog was edited out of your first post since that is not really allowed outside the Marketplace.

@Alexander Felice ok first of all BRAVO!!!!! this is an incredible. I just finished my first deal and first BRRRR. I however had to wait the 6 months to be able refinance off of appraisal because as you, @James Clements and I all know the delayed financing prevented me from getting back anything above my purchase price and closing costs as they were listed on my HUD. can you PLEASE PLEASE PLEASE explain in further detail on what you mean by involving your lender in the HUD before closing and on "loading up/optimizing the HUD". Your 9 week turnaround timeline is inspiring!!! Great job!!!

Originally posted by @Alexander Felice :
Originally posted by @James Clements:
@Alexander Felice I thought delayed financing meant you where limited to get back only the purchase price + closing costs? You were able to get your reno money out of the refi it seems. maybe I'm missing something.

house looks great for a quick reno. you must have a great team!

Common misunderstanding I think as I hear that all the time.

The rule is you can pull 75%LTV or 100% HUD whichever is lower.

The guidelines say NOTHING about what those funds itemize out too, it only states 100% of HUD

so load up the HUD! I included a picture of the hud on my blog post for detail. I added my year of insurance costs to upfront as well ;) ;)

I do have a great team, I'm incredibly grateful for them all. Building a team was not luck for me, all done through hard work and hiring lots of idiots, thieves, and disappointments before hand. Team building is a talent like any other, takes diligent practice to get good. Thank you!

That's awesome, didn't know you could finance out that way with delayed financing. Great work!

Great tips @Alexander Felice !  You almost make it sound too easy until I read your comments a little lower.  :)  It's great to hear a story of everything firing on all cylinders after you got the right team in place. 

Congrats!

Originally posted by @Nicole A. :

@Alexander Felice Great information! Could you expand a bit further on the statement, "so load up the HUD!..." ? The link to your personal website/blog was edited out of your first post since that is not really allowed outside the Marketplace.

 ok well that pisses me off. LOL It's still accessible through my site link if you're really interested (rental #5 link)

When I say load up the HUD, I don't mean to do anything shady, rather, to include all pre-close costs possible.  With delayed finance you only get ONE SHOT to get this right. once the HUD is complete, it's done, or as I like to say "you own it now".

This is why my most important piece of advice when doing delayed finance is to include the lender WAY in advance. This way he can simulate the loan conditions while using the HUD numbers before I'm committed. So the day I get the HUD, he inspects, then I sign. This causes me a great deal of ease. It's also one additional party checking my deal to make sure I'm not being a (blatant) moron.

Originally posted by @Jason Brown :

@Alexander Felice ok first of all BRAVO!!!!! this is an incredible. I just finished my first deal and first BRRRR. I however had to wait the 6 months to be able refinance off of appraisal because as you, @James Clements and I all know the delayed financing prevented me from getting back anything above my purchase price and closing costs as they were listed on my HUD. can you PLEASE PLEASE PLEASE explain in further detail on what you mean by involving your lender in the HUD before closing and on "loading up/optimizing the HUD". Your 9 week turnaround timeline is inspiring!!! Great job!!!

Yes im curious about the mechanics of adding to the HUD. Is this only applicable to cash deals?

also bear with me here. I read through your blog post and was confused on one sentence where you comparing the difference in waiting vs delayed finance. where does the amount $5,757 come from in the following sentenced pulled from you blog:

"ARV: $85,000

75%: $63,750
HUD: $58,553.36

Difference: $5,196.64. What this difference means is that if I waited for 6 months of financing I could pull out 75% of that additional $5,757 or $3,897."

@Jason Brown thanks! I mentioned a bit earlier in the thread.

the rule for delayed finance is widely mistaken on this site. Everyone understands it as "purchase plus closing costs" but that's not what the rule states that's just what somehow became known as standard. It's not standard.

the rule is 75% LTV or 100% of HUD whichever is lower

That's the rule. So I make 100% of HUD be 100% of my costs.

I should note, this means that you will have to pay your rehab costs at the time of closing to escrow, they will disburse to your contractor. If it's on HUD you're paying it up front.

@Jon Crosby it is easy! trust me, if it's easy for me it's easy for anyone else who wants to do this. Just gotta figure out the system a bit to maximize things at the limit, but that's why I try to help, so the next guy can see how easy it really is ;)

Originally posted by @James Clements:
Originally posted by @Jason Brown:

@Alexander Felice ok first of all BRAVO!!!!! this is an incredible. I just finished my first deal and first BRRRR. I however had to wait the 6 months to be able refinance off of appraisal because as you, @James Clements and I all know the delayed financing prevented me from getting back anything above my purchase price and closing costs as they were listed on my HUD. can you PLEASE PLEASE PLEASE explain in further detail on what you mean by involving your lender in the HUD before closing and on "loading up/optimizing the HUD". Your 9 week turnaround timeline is inspiring!!! Great job!!!

Yes im curious about the mechanics of adding to the HUD. Is this only applicable to cash deals?

also bear with me here. I read through your blog post and was confused on one sentence where you comparing the difference in waiting vs delayed finance. where does the amount $5,757 come from in the following sentenced pulled from you blog:

"ARV: $85,000

75%: $63,750
HUD: $58,553.36

Difference: $5,196.64. What this difference means is that if I waited for 6 months of financing I could pull out 75% of that additional $5,757 or $3,897."

ok actually this is kind of in the weeds of this type of deal, but it's actually really important.

The problem with that statement was the ARV came in low making it moot, and I did the math wrong now that I look at it again.

If the ARV was 85K

and 75% LTV was 63K,

and I had 58.5K on the HUD

and I used delayed financing I could only pull out 58.5K (100% of hud or 75% LTV whichever is LOWER).

so that means I end up with $5250 in the deal that I couldnt' refi out, unless I used traditional financing and waited 6 months. So it's important when you do these deals to ensure your HUD and ARV are lined up TIGHT. You then have to decide how long it's worth waiting for the remainder. In this deal the difference came out to nearly zero, so perfect, no reason to wait.

the last deal I was 11K under 75%....so I waited 6 months to extract that extra cash.

I hope I explained this better

think of it this way, if my total cost was only

You and I have already discussed this deal and the delayed finance portion of it but I still wanted to say congrats on a great and fast BRRRR!

@Alexander Felice can you clarify when you refi in 9 weeks, it sounded like you refi into a conventional loan. But i spoke with few mortgage broker, and one of them even called the Freddie Mac to confirm and they told him that they don't allow escrowing the rehab cost on HUD. Was it a portfolio loan that then refis into a conventional loan (I do know of a bank that allows this for 1 year interest only then refi into conventional loan) but not something you can directly delay finance in 9 weeks into a conventional loan. Would you mind sharing the lender you used so i can speak to them and see how they did it? Thank you.

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