My first BRRRR -- Auroa,IL --- Thanks BP....
Just got a call from my lender that my Cash Out refinance approved.....
I would like to take this opportunity to Thank BP Community for valuable support and information... Would like to share some info which might be useful for those who are considering this strategy..
The property (typical REO) came in the market in Oct. last year. It was a 3BR, 1.5 BTH 1/2 duplex listed for $93.5K. Listing price was very attractive and location was perfect. Obviously there was a bidding war (nine offers in four days) and we an aggressive offer of $101K. Our offer was accepted and as expected there were many surprises, few unexpected ones too as follows --
Surprise #1: I knew that all utilities were off but never thought that the gas line wold have been completely removed. Yes, I later on learned that the property was vacant for more than four years and Nicor had removed (not a normal disconnection) the gas line from from the road side. Bank cannot finance without Gas connection...
Surprise #2: Property was winterized and when plumbing was checked - pressure test failed - no point to turn on water.
Surprise #3: Squirrel (bird or raccoon..no clue) in the attic. Big hole on the side of the attic, damaged roof.
Obviously, the contract was contingent upon inspection and we pulled back using the same.
Property was re-listed in the market and this time we went more aggressive but offer price $89K Cash Offer with $20K EM. We new exact condition of the property and Seller knew that we knew it and it worked in our favor. We got if for $89K. Here are the specs -
Purchase Price: $89K
Rehab+Holding cost: $20K
Total Investment: $109K
Appraisal: $135K
Refinance (LTV 75%): $101K
Mortgage payment: $690 p.m. (PITI)
NET Out of Pocket (After Cash Out): $8K (SWEET)
Rent: $1450K
- Learning: I should have done this within six months of closing which would have been a Delayed (technical) refinance and not a 'Cash Out Refinance'. there is a limit (I guess four) cash out refinance. Delayed Finance is just a regular financing and wouldn't have affected that Cash Out Refinance Limit. Would appreciate inputs from other BP members if I am missing anything here.
Thanks and Happy Investing...