What’s the fastest way to getting into a 5+ unit property?

Question

I currently am doing a live in flip in a duplex. With that being said, I don’t have enough for a down payment on a multi family property. What is the fastest or most effective way to buy or brrrr a 5+ unit?

Todd Dexheimer · Answer

Get the money.

Several things you can do:

1. flip/wholesale some properties to get the money

2. Partner with other people to get the down payment

3. Buy with seller financing

4. Refi or sell your duplex

5. All some or all of the 4 steps above

Doug Smith · Answer

Does the hard money cover the rehab as well? What would you be looking at coming out of pocket?

Ehab Shoukry · Answer

@Doug Smith yes definitely include the rehab in the hard money loan. You will come out of pocket the costs to get your rehab started and then request draws from the lender as work is completed. If you use a credit card you can float a lot of the costs so you come less out of pocket.

For example if you have a $50k rehab, you might start by doing $20k if work before requesting a draw. Half of that $20k May be payment to your contractors and the other half was materials purchased from Home Depot on a credit card. When you get the $20k draw from your lender you’re pay off your credit card and reimburse yourself for contractor payments.

At the end of the project if you managed costs well you should have very little out of pocket when you refinance.

Odie Ayaga · Answer

@Doug Smith hard money loans typically include a rehab portion unless the buyer doesn't want it for some reason.

Greg Dickerson · Answer

You can use creative financing as others mentioned. One that was led out is subject too. This opens up deals with little to no equity. However, even with no money down and creative financing you will still need some cash reserves to cover ay issues. Another option would be to raise private money to purchase property and fund any renovations and reserves.

Hadar Orkibi · Answer

@Seth Mceleney if you have sufficient equity in the duplex you could potentially get a HELOC and use that for down payment on the next deal. I have done this many many time.

You juts need to make sure you can cover the extra interest cost on the HELOC.

In saying that, you only pay on whatever you withdraw and if you buy your next BRRRR well you should be able to refi it or have enough cash-flow to cover it.

Ehab Shoukry · Answer

Buy it at 70% ARV minus repairs and use a hard money loan to acquire the property.  If you are buying right then you will need little to no money out of pocket.  After the rehab is complete, refinance into a long term note.  I've done this multiple times.

Alex Ramirez · Answer

Wholesaling or have the owner carry the note.

What’s the fastest way to getting into a 5+ unit property?

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