100% financing, is this smart?

[Case Mccarthy]

Hey everybody, has anybody structured a deal with 100% financing specifically on BRRR method on 2-4 units? If so, how did you find those connections, what helped you structure the deal, and how did that deal end up working out for you? Thanks!

[Travis Timmons]

It's a great idea if it works and a terrible idea if it doesn't. My personal take is that it is a bad idea...it just puts too much pressure on the deal to perform. I suppose it depends on circumstances and how much of a cash buffer that you have. Rule #1 is to never be a forced seller, and too much leverage on a deal that goes sideways is probably the most common reason why that happens.

I have done a deal where I bought a distressed property that could not qualify for a conventional loan with a HELOC, so it was a 100% financed deal. It was, however, interest only at 2.9% for the first 12 months, I had significant cash reserves, the property that the HELOC was against was worth about 2x the first position HELOC balance, and I owned another property on the same street as the new purchase (very familiar with the location and property). It was a low risk deal given those factors, so I didn't mind levering up.