Creative Finance + BRRRR. Is it possible ????

Question

Hey guys I’m taking a dive into the creative finance game. There’s a lot to uncover and lots to learn. For the BRRRR method, you would normally buy properties at a discount then rehab to force value. When buying a property using seller finance, would it make sense to lowball so I can refi out after repairs are done or would you recommend buying at a retail value where the seller is comfortable at and play the waiting game to refi as the property appreciates. Also how would I go about acquiring a subject to property. If the owner has no equity I would have to use my money for renovations to get it to market standard… correct ??? The main point of subject to is to avoid the banks and get a lower interest rate, correct ?? I’m still a bit confused on this concept. Any help or advice would be greatly appreciated!!!

Samuel Eddinger · Answer

@Nicholas Hariprasad.  You are exactly correct with the BRRRR method; buy a house which you fix up to increase the value and then pull out the equity with the refinance so you minimize the final money out of pocket you have.

For seller financing, I think it makes the most sense when thinking about this to try to put yourself into the seller's shoes.  All will realize how hot the market it right now so if you lowball them (or if they feel like you are), you are not going to get the sale.  In Subject To, you are basically transferring the property over from the seller to you and you are responsible for all of the conditions that seller had (generally a low interest rate).  If work is needed, there is no way you are getting that from the bank.

There are a bunch of people that do this kind of stuff in local meetups.  I'd highly recommend you come to some at CTREIA, and/or with @Brandon Rush, @Stephanie Cabral, @Devin Peterson and/or @Ryan Luby.

Heidi K Lovig · Answer

Hi Nicholas... @SamPrimm from @FasterFreedom knows a thing or two about BRRRR. I am in the FF mentorship and I would suggest you checking it out. Sam walked us through these very topics and questions. We are not really in the business as investors of making "lowball" offers ever. We are however interested in paying what the house is actual worth and subtracting the average costs of a go-to-retail strategy that the seller saves by doing. There are simple equations that can be done to know what your MAO is on any property. Maximum Allowable Offer. And it works really well for BRRRR. The main point of Subto is to not put more money in banks pockets and keep money in the peoples pockets. When you approach it from a win/win, you will have a much better story. Maybe find out what they need help with, what is stressing them out, what is hard on them and keeping them from sleeping... see if you can add value... see if you can be helpful to them. See if what you have to offer actually benefits their situation. You'll be surprised what you find. :) Hope that helps. If you want to talk about @FasterFreedom and the BRRRR strategy we can totally jump on a call. DM me.