Best loans for starting out in investing.

2 Replies

I am getting started in real estate and have researched a lot about what to look for in a deal, etc. However I still want more clarification on the loan process.

My thought is:

Obtain a interest only loan for 2-3 years. 

Purchase an undervalued property (BRRR method) etc.

Refinance after obtaining renter and then refinance with a home equity loan and do it all over again.

Is this a realistic process? Thank you for your feedback! 
 

Interest only loans with single digit rates are non-qm, harder to get, and slower to close. In a warm or hot market, the seller does not care about your financing, they do not have to, there are 7 or 15 other offers from people getting normal financing or no financing. All else being equal, they will accept the offer that is the most reliable and that can close the fastest. So, pragmatically, if you want to do interest only, that means being the highest offer, since you can't be the fastest or the most solid. Most people would say that a strategy that involves over-paying on the sticker price is a non-starter. 

Due to the HGTV effect (everyone wants to be a reality TV star and "buy a fixer upper, since I'm handy with tools"), beat up properties garner MORE market interest than turnkey, not less.

Originally posted by @John Werthman :

I am getting started in real estate and have researched a lot about what to look for in a deal, etc. However I still want more clarification on the loan process.

My thought is:

Obtain a interest only loan for 2-3 years. 

Purchase an undervalued property (BRRR method) etc.

Refinance after obtaining renter and then refinance with a home equity loan and do it all over again.

Is this a realistic process? Thank you for your feedback! 
 

A safer and more realistic plan would be to house hack a double or quad with an FHA loan.