Real Estate Agent · Omaha, NE · Member since 2015 · 27 posts · 6 votes
Hey guys, so I'm thinking of purchasing a property listed for 69k. ARV is around 75k, and I believe I can get it for 55k. It is currently rented with a section 8 tenant for $1010 a month who would be a long term tenant as she's currently lived there for 13 years and wants to stay. Using the BP rental calc my CoC return would be 42.4% after putting down 25%.
My question is, would this be a smart BRRRR situation? I wouldn't need to necessarily do any repairs as it's already in pretty good condition and it would make it tougher to do any remodeling with a tenant in there. I would be funding the dp with my LOC, and the bank will perform an initial Evaluation of the property to determine a value, and the loan amount will be 75% of that Evaluation but won't exceed 75% of purchase price, so I just want to be sure it is a good situation for me to not have the funds tied up from LOC long term. Thanks in advance for any insight!
Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
9y
Casanova Brooks
Do you have enough on the line of credit to buy the house all cash? Then, you could look to refinance based on the ARV after a certain seasoning period. But I wouldn't be looking to do a lot of renovations with a tenant in place. Also, if you can buy all cash you won't have to pay closing costs on the initial purchase and then again on the refinance.
Real Estate Agent · Omaha, NE · Member since 2015 · 27 posts · 6 votes
9y
@Darren Budahn I do not believe so, my first property i purchased for 18k and put 6k in so 24k total. It appraised for 65k. Now I looking to acquire my second property and wanting to do the same thing. I can advance the money from my LOC for the 55k property but want to make sure I can pay off the LOC once the property is appraised out. Hopefully i made sense there.