Rental Property Investor · St Petersburg, FL · Member since 2022 · 4 posts · 2 votes
Most advice given on this forum, books and other places about real estate investing all involve some form of rehab. Most recommend Brrrr type strategies in an effort to reuse as much as your initial capital as possible.
My question is for those using a long term buy and hold strategy that doesn't involve significant value add rehab, how are you scaling up? I can't seem to think of creative ways to finance these deals other than saving big chunks of money over a long period of time. Hard money is mostly going to be applicable to rehabs. A HELOC would require finding a property that cash flows a ton because you would still have to come up with a way to pay down the HELOC to reuse for future deals.
Depends how big you want to get. Saving up and buying slowly overtime is the reality for most. You can also look to find partners. For mine, I just saved up the down payment, got a mortgage and repeated as many times as I could. Some meeting renos, but I didn't refinance. There are many different ways to do things, this works for me.
No, pretty much save up money... That's why this is investing, not a job. I think the "buy with no money" schemes are possible, but more risk and you need to find the "right" deal to make it work. The rehab is that "forced appreciation" as they call it (I just call it "buying low"), but that too carries risk. Good luck.
@Shane M. the above posts are pretty accurate without forcing appreciation to create "new capital" from your investments. This is why we see so much about the BRRRR method, because it works, and eliminates the issue you're facing. Even using Gap Funding for down payment and closing costs runs you into the same issue, because while it saves you having to share any of your equity, the debt service for said funding usually eats away at most of your cashflow (same as your reference to a HELOC, on a HELOC would be a much lower payment than Gap Funding [va unsecured debt]).
In most cases, its one of 3 options:
1. Force Appreciation to get your money back out, to do it again
2. Find a killer deal where that HELOC or unsecured debt for Gap Funding still makes sense for you and your cash flow