Hi, I'm looking for some advice on the best way to leverage property that we have with the intent of picking up foreclosed properties for fixing and flipping. I'm a GC with many years of rehab experience, lots of tools and equipment. The property is a house that is rented with about $100k in equity, and a factory building in upstate NY that is valued at around $70k with no encumbrance, We're looking for projects with buy ins of around $25k - $ 35k, and renovation budgets of $50k or less. The goal is to be doing about four of these a year.
I'd love to hear any advice someone might have, experiences, and definitely holes in my plan that I'm blind to. All comments welcome.
I like the strategy you're suggesting. We do the same sort of thing to add to our rental portfolio. I just look at the refinance of the existing property as I would a new purchase: make sure the income produced by the property you want to refinance is sufficient to cover all operating expenses and the new debt. In my experience lenders want to see a debt coverage ratio of 1.25 or so. It's a great strategy to maximize use of your equity without selling off your existing properties.
Thanks for the affirmation as well as for the ratio advice. That's very useful information. Much to learn here, and the BP community is a great place to learn it.
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