Incredible to read a forum with so many interesting and great suggestions. My name is Srikanth, a newbie investor, looking to get into real estate. I recently came across BP a few weeks ago and immediately started planning and building out initial strategies.
The one questions I wasn't able to completely get an answer through my research was how to pay the interest payments while rehabbing the first piece of real estate. Whether I pull out a 70K loan to a 100K loan, how do I make the interest payments during the rehab process?
Thanks again for all the information!
Welcome to BP, @Srikanth Nanduri
The short answer is that you will have to have the money to make those monthly interest payments. Ideally, that will be your only money "out of pocket."
Also, be sure that the total of what you spend on purchase, closing, and rehab does not exceed 75-80% of the ARV of the property. Otherwise, when you cash-out refinance (and they only give roughly 75-80%) it will not give you enough to fully pay back all your costs. I would recommend to start calling banks early on to ask them about how they do their cash-out refinances. This will help in your planning.
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