Good morning Curtis,
The BRRRR is a great way to get started. One of the best ways to get started is by using a 203K or rehab loan... this will allow you to get in the property with 3.5% down and you can even finance the rehab.
Interest rates are a bit higher than traditional FHA loans but the 3rd "R" stands for REFINANCE so you'll only be holding that loan for a short time.
I'd speak to a local lender, broker, and investor for more info.
Aside from attending local meet-ups, don't hesitate to reach out to people personally via private message or on forum posts... There are plenty of good resourceful people on BP and not all of them attend REIAs.
Best of luck to you!
@Curtis Wortham - this method is the best. I'm a huge believer in doing it this way and the 203k is the gateway to getting you started. Couple of key points that really separate the 203k from other products include:
- ability to finance up to 6 months of mortgage payments while the renovation is being completed if the whole is listed as uninhabitable by the HUD consultant. This can be huge for your strategy.
- being able to use projected rents when purchasing a multifamily to be able to qualify
- ability to convert properties and increase or decrease units
@Abel Curiel - you are correct - rates tend to be higher- normally 1/4 to 3/4% higher depending on factors and timing.
I am a huge fan of this strategy (when done right!) and have worked hand in hand with many people doing the same. Your heading in the right direction!
Good luck and happy investing!
I have just recently changed my strategy to purchase my second property. Initially I was going too cash out on a Sheriff sale property and refinance my current duplex for to find the second properties rehab.
Although it’s not a bad idea, I don’t wanna bank on the equity in my home to be enough. So I’ve since second thought it and paced my planning.
Now For this 203k loan, could I fully BRR(R) with that loan? Would I be able to refinance that and pull money out of that?
@Curtis Wortham Are you planning to make this new property your primary as that is a requirement to use the 203k? If so than this works.
You could refinance out of the 203k and take cash out assuming the equity position is there at the end.
@Jeff Onofrio no I didn’t plan on occupying, I would have lied to have immediately renting out after the rehab, but now I have to even rethink now too than haha
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