BRRRR House-Hack Questions

9 Replies

Hello BP Community, I am trying to purchase an investment property in the town I live in in North Carolina. This would be a BRRR/House-Hack hybrid. Essentially my wife and I would buy and live in it while we did the rehab work and look to flip or rent in a year or two when we are ready to do it again.

I am very experienced in residential remodeling and construction. From 2011-2013 I was the lead Project Manager for a national company that managed rehabs, renovations and repairs for bank-owned and investor-owned foreclosures. During that time I managed several hundred projects all over the country, from large to small. Since then I have been involved in residential design and for the past 6 months have been self-employed with my own freelance design studio.

We were just pre-qualified by Guaranteed Rate for a mortgage, however we could not get pre-approved and the only reason was because I have not been self-employed for two years. Even though I have been in the industry for a lot longer than that and meet their financial requirements and qualifications, they won't approve because I've only been self-employed for six months.

The home we want to purchase is a 3 bed, 2 bath SFH that sits on 3.9 acres about ten minutes from our current home and a half-hour north of Charlotte. The house itself is in good shape. It needs some updating, primarily an interior re-paint and a new range. It is in decent shape as-is and we would completely update and renovate the kitchen and both bathrooms over time. This is a great opportunity for profit as the house is already undervalued I believe at $73,500 considering the acreage alone and the fact that the house is in decent shape.

My questions are.... do any of you have wisdom or ideas to share on how to make such a deal work out considering the circumstances above? What sort of creative financing would you suggest? Seller-financing is not an option. Is the fact that we would live in it a draw-back. Is my experience in the industry a plus?

Our hope would be to find some creative financing and then either sell/flip in a couple of years or re-finance once I meet the two years self-employed criteria and keep it as a rental property.

Thank you all for reading and providing feedback!

@Joshua Stewart , are you saying that an FHA-approved Lender, looking at your history and circumstances (and the deal), will come to the conclusion that they can't risk lending you $71k, because: what if you can't pay back $500/m?

All because you can't dot a particular "i", or cross a specific "t", on one document*?

(Never mind the fact that you can prove you've never been late paying $1,000 rent per month for years, for example!)

Sheesh! What's the country come to? Press on regardless; you've got the right idea. All the best...

* [It would be hoped though, that in all that time, you'd saved up a significant deposit between the two of you! No?]

@Joshua Stewart sounds like you are on the right path! My wife and I are looking for the same thing in Raleigh currently. Sounds like you've found yourself a good opportunity and have the tools to make it happen.

As for the finances, I would not stop at one lender. Continue to call everyone who does any form of lending. It sounds like you may have used a larger box lender and their criteria has become increasingly ridiculous. If you have a forged relationship with a local lender or have any connections to one, I would make those phone calls first. The downside of working as 1099 or for yourself is exactly what you're experiencing, difficulties providing enough documentation on your income. Keep calling until you find a lender that will do it; guaranteed you'll find one. Good luck!

Yeah, conventional financing is not the way to when you're just starting out. Like you I don't have any W2 income so normal financing doesn't work with most larger banks. I've had good luck with local banks and credit unions. Charlotte is a huge financial market, I'm sure that someone with your background can find alternative financing. Good luck!

Hey Josh,

Maybe look into Lima One Capital or ICG10, I have been looking at both lenders but haven't worked with either yet.  If there really is profit in the deal, maybe you can afford their hard money?

Like the others said, keep calling local, small banks to see who will work with you.  Present yourself professionally and I'm sure you will find someone who can help.  We are in a similar situation and that's what we are trying.

I have a list of Charlotte/Gastonia area local banks that I am calling.  First of those that I have called have been receptive and interested to help.

Good luck

-----

This is just a gross list I made after googling.  I have not called many yet nor have I edited the list down.

Lenders

ICG - icg10.com/programs / 

Bank of the Ozarks - https://www.bankozarks.com/

Belmont Federal - https://www.belmontfederal.com

Carolina Trust Bank https://www.carolinatrust.com

Fidelity Bank - https://www.fidelitybanknc.com/gastonia-cox-road/

Fort Financial Credit Union - https://www.fortfinancialcu.org/products/

Alliance Bank & Trust  https://www.alliancebanknc.com

First Federal Savings Bank https://www.ffsb-nc.com

Mortgages by Scott  http://mortgagesbyscott.com

George Mason Mortgages https://www.gmmllc.com/gastonia-branch/ Jenny Holder

Cedar Hill National Bank 

Fairway Mortgage http://fairwaymortgagecarolinas.com/contact/

First Bank https://localfirstbank.com/business/

Park Sterling Bank - https://www.parksterlingbank.com/index.htm

Randy Miller for Fannie Mae Multifamily - 301 S College St, 4th floor. 

@Josh Stack You nailed it! Just keep calling around. This is 2017 not 2012 the banks have loosened up quite a bit. 

You might even want to ask for a bit more $ to cover rehab work and so the closing costs aren't as big a % of the loan amount. I know some lenders won't lend under $60K because its too small a loan! 

Just go and make it happen, each No is one step closer to a Yes. Go make your own "luck".

@Joshua Stewart Where did this end up? Did you find a lender? It seemed like a great deal.

The live in part hurts you for going to a portofolio lender and the long term nature of what you are doing probably makes it tough with a hard money lender.

How much Rehab money were you expecting to put into the house?

@Aaron Vergason, we passed on this one. Even though it was a great deal we needed to stay in our county for the time being in order to complete an adoption. We have however started a relationship with a local credit union, so hopefully that is beneficial when the time comes for a live-in house flip. In the meantime we are looking at some hard money lenders to do properties we won't move into.

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