BRRR Investors, I have a question about loans...

Buying & Selling Real Estate
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BRRR Investors, I have a question about loans...

Jake Vayda
Chula Vista, CA · Member since 2019 · 19 posts · 7 votes

Hello everyone! I'm excited to announce that I am buying my FIRST property as a real estate investor. My wife and I are excited about this opportunity; with that said, I need your wisdom.

ABOUT THE DEAL...

The house is worth around 140k. We are doing seller financing for 60k of the cost. This means I need to acquire $80k for the rest of the house. I plan on BRRRing and putting 15k in rehab and hope it ARV's for around 160k (I plan on hiring an appraiser). I do have 20k in cash as well that I could use for a downpayment.

QUESTING ABOUT THE FINANCING...

What type of loan should I use, AND how would you go about it if you were me? Since I am 'technically' buying it for 80k even though it is work 140k, can't I get a better loan since I am only taking out 57% (80k/140k) or even WITH rehab it would be 71% (100k/140k)? Am I missing something?

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    6y
    Consider getting a hml to cover all of your purchase and rehab cost, then refinance out with the take out lender. To me that would be much simpler to deal with.

    Good luck
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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    6y

    @Jake Vayda

    Well, if you are buying it for $80k the market value becomes $80k. The LTV is based off of that value. To maximize the brrr method, you would buy in cash, basically no loan in your case, and refi after your are done rehabbing.

    To figure the best loan product, you really need to talk to a vendor. I don’t know your credit score or financial info (nor would I expect you to provide on a public forum). Also, you haven’t told us if you are occupying thr property as your residence. Some loans require owner occupation. If your aren’t, your main loan choice is a conventional loan, but for investment so slightly higher interest rate as usually min20% down

    I hope this helps. Good luck

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