Using personal house as financing?

Question

I owe $144k on my home, estimated value is $320k. Would you consider refinancing and use that money to invest in other real estate opportunities? I also have $80k cash but am having a hard time finding deals in my area (Minnesota - Twin Cities) that could be funded with only that cash. Thoughts? I’m trying to find my first deal but don’t want to settle.

Noah Chappell · Answer

@Justin Gustafson cool! Yep that's one way. Otherwise you can skip trace them with one of many shady free websites that search public records, then call or text message the #'s you find. You can leave a note in the mail box. You can ask the tenants who they contact with problems, then contact that person. You can look at the assessors website, which will usually have the name and sometimes # of the owner. If it's owned in an LLC, call the associated number which will probably be for the property manager, explain the situation, they'll tell the owner.

I think it's about systematizing. If you do above once, you have 0 change of success, but if you do it 3 times daily, you'll probably get several strong leads a month.

Noah Chappell · Answer

@Justin Gustafson I would use the 80k for a DP on a hard money loan (might be 30% - 40% DP if it's your first one), by a duplex or single fam, then take out a line of credit on your primary residence to use as rehab budget, then rinse and repeat BRRRR'ing.

Do find deals you may have to go where others aren't willing to. Forget the MLS, lost cause. I'd walk for dollars, then contact individual owners. Also could get a list of vacant properties from assessors website, skip trace, and contact owners. Remember, the more difficult it is, the less people are doing it, the less competition and the higher chance of your success.

Daniel Anshus · Answer

@Justin Gustafson $80,000 in cash is definitely enough to buy a property conventionally. Would love to have a conversation and see what you're trying to do and why you haven't been able to do it

Justin Gustafson · Answer

@Noah Chappell I happened to do that the other day, nearby home, no sign of activity, looked up tax records and found name... how do you go about contacting them? Mail and hope letter gets forwarded to tax payer?

David Barnett · Answer

As Daniel mentioned, an $80k downpayment would likely get you a property in the $300k-$350k range (assuming some money set aside for closing costs and reserves), assuming you are bankable.

Justin Gustafson · Answer

@Daniel Anshus I guess I’m just using conventional ways to acquire. I don’t have anyone in my network to ask some of these basic questions, so I guess I’m just learning as I go. Will continue to find other ways

Stephanie P. · Answer

If you're trying to just pay cash for properties with 80K or 80K plus the refinanced cash out,that may be tight, but leveraging that money, whether it's with a conventional loan or a non-qm loan would make more sense.  Let your money work for you using other people's money.  Millions of people have done it for years.

Stephanie

Daniel Anshus · Answer

@Justin Gustafson you can find plenty of opportunities with that much money. The question is what is your investing goal and what do you want to invest in?

Kyle Potswald · Answer

You have a lot of options Justin. I would look at the long-term plan and see what structure fits you best. If your current primary residence is above 3% it might be a no brainer to lower your rate while pulling out equity. You get best rates typically on primary residences before investment properties. If you are looking to scale, you could put a line of credit on the the investment property to help make cash offers and could hold the real estate in an LLC. Conversely rates are low so it might not be a bad idea just to finance it personally and get a long term low fixed rate,, something in the 2.5% range. The rental income will pay the mortgage and use your funds as down payment.

Using personal house as financing?

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