BRRR after using cash from a HELOC?

Question

Has anyone successfully been able to get a loan/refinance a cash purchase (when the cash was taken from a HELOC?)

I am buying my first rental property using cash from my HELOC, and I just heard of the BRRR strategy which I would love to be able to implement if I can. Anyone have success with this?

Thuy Pham-Satrappe · Answer

@Matthew Drouin thank you! Yes I am purchasing with the "make money when you buy" mentality in mind. I actually withdrew 2 of my offers last week because I realized they weren't good deals

Lien Vuong · Answer

@Thuy Pham-Satrappe You're in the right forum to be discussing these strategies. Mindset will help you get to your next place! You might want to try to ask your agent if there are some off market or expired listings in your area where people might have overlooked that could work for you. I'm sure the open MLS market is incredibly competitive in your area. Saying that you're a cash buyer would make the sellers more motivated and wiling to work with you!

Matthew Drouin · Answer

@Thuy Pham-Satrappe this is a very tried and true strategy to scaling the wealth building affects of real estate.  To echo what the other contributors said make sure you are buying the property right.  If you aren’t getting a great price then you could get stuck keeping some of your equity in the subject property.  If this does happen, no big deal but it’s not sustainable if you wish to keep scaling.

Thuy Pham-Satrappe · Answer

@Jerry Padilla thank you!

Thuy Pham-Satrappe · Answer

@Chris Martin thank you!

Jerry Padilla · Answer

@Thuy Pham-Satrappe

I have clients that use this method all the time. I myself have done this as well. This method is best used when you buy property that is undervalued, and you force appreciation by doing some renovations to the property that are supported by your local market.

This method doesn’t work when you buy property at retail value. You are better off getting financing initially, if you are buying turnkey properties at market value.

For example, purchasing a property valued at $100k for $100k if you obtain financing initially you can get a mortgage for 15-20% down. But to do a cash out afterwards you will be required to have an LTV of 75% LTV, plus rates are slightly higher for a cash out.

Chris Martin · Answer

Literally Thousands of people on BP have done this. Just pay attention to the seasoning and loan requirements. Talk to a mortgage broker when you get within 6 months of cash-out.