BRRRR Financing HML or Save
Hello everyone,
Not sure if this is the right place for this question but I'll give it a shot. I am looking to BRRRR my way to financial freedom. However I do not have much capital saved. My simple question is should I look for a HML or something similar or just wait and save up for a year or so ( I can save about $1300+ a week). I'm just itching to get my next (2nd) deal.
Please let me know what you think and I greatly appreciate any and all advice!
Thank you!!
Jaron
Are you really saving 1300 a week? If so, you'll be there soon however you go about it. Have you considered traditional sources of lending?
Yes, I work construction and bring home right around $1900/wk net. I need only $500 a week for all the essentials (bills, $100/wk into ROTH IRA, groceries, etc), so I have been aggressively paying off my credit card debt, 8 more weeks and it will be paid off. I will then take the $1300 a week and start saving it instead of needing to pay off my credit cards.
My goal is to ultimately BRRRRR over and over. To attain financial freedom to the point where I can choose where, when and if I want to work.
I'd love to get my second deal done now, but in order to do so I'd have to use a HML or something similar, considering I'm putting all my extra cash into my bad debt. I think if I can save up $75k cash I wouldn't need a HML And I'd be off to the races.
Thanks for reading,
Jaron
@Jaron Smith
I wouldn’t be in too big of a rush. The benefit of getting credit repaired and being able to use conventional loans plus having true cash to buy and rehab will be a really advantageous position and might be worth the wait. You’ll have plenty of time to use hard money when you run out of conforming loan options down the road. Keep personal expenses down, you are killing it as far as income/expenses go.
Curious what is/was your first deal? Was it a flip or buy and hold?
Thanks @Todd Rasmussen, that is some great advice! You're right, I will eliminate my bad debt then start saving for my next purchase!
My first purchase was a buy and hold triplex. I bought it for $50,000 using an FHA loan only needing to put 3.5% down. I put roughly $8,000 into the property and lived in one of the units for a year (house hacking). We then moved out and rented out the third unit, it now cash flows around $800/mo after mortgage, water, trash, and saving for capex and repairs. I learned a lot from this deal but at the same time feel like I don't know anything. There's so much to learn about this biz and the best way to learn is by doing. Anyways I purchased this house before I was financially ready, so I was buying materials and paying for repairs with my credit cards which is why I have accrued the credit card debt. All in all it was a great learning experience.
Jaron
@Jaron Smith Sorry to go off topic, first off best of luck, I think saving the cash is best. Secondly, is your job hiring for 65% of what you make?
@Jaron Smith Not bad for first deal. I purchased my first/current home with fha 2 years ago and it was a owned by someone who rented it out but did not take care of it at all so got a great deal on it in the process of renovating it to sale it and hopefully make 50-70k profit to purchase a small home and use the rest to get started in first rental property
@Phillip G Alexander Skilled trades dude!!
Take your time and not rush the process. Real estate is a slow-moving capital intensive investment. The people who lose money or blow up always try to rush the process.
Warren Buffet says "everyone wants to get rich fast no ones wants to get rich slowly" There is a lesson to this quote.
@Frank Wong thank you that is a great piece of advice.
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Originally posted by @Jaron Smith:
My first purchase was a buy and hold triplex. I bought it for $50,000 using an FHA loan only needing to put 3.5% down. I put roughly $8,000 into the property and lived in one of the units for a year (house hacking). We then moved out and rented out the third unit, it now cash flows around $800/mo after mortgage, water, trash, and saving for capex and repairs. I learned a lot from this deal but at the same time feel like I don't know anything. There's so much to learn about this biz and the best way to learn is by doing. Anyways I purchased this house before I was financially ready, so I was buying materials and paying for repairs with my credit cards which is why I have accrued the credit card debt. All in all it was a great learning experience.
Jaron
House hack again. Use 203K to do any renovations.
