Investor · Norfolk, VA · Member since 2018 · 7 posts · 2 votes
Hey BP,
You guys are awesome! But, ground rules first:
Don't post if you haven't read the responses already in place. It just wastes the reader's time. No Repeats.
What strategies do you have to get 70-80% of ARV back in less than six months on a property? I have found the following:
1) Talk to a Credit Union
2) Talk to a portfolio lender
3) Hold a note for your LLC so there is already a loan in place that can be refinanced immediately
**Please feel free to elaborate specifics on these. Opinions kept to a minimum.**
**Please add other common/repeatable strategies to the list (Ex: none of the "Bob down the street did this for me but only me.")**
There was already a post about this, but it's a lot of mortgage brokers arguing with each other over semantics, so I had to be specific for this one to try to get the answers/options I'm sure people are looking for.
You can structure your loan correctly including everything in the first position mtg note (purch, rehab, carry, etc). A payoff of this loan with less than 2000 cash back to you is considered a rate term refinance and if you'll do a good job you'll be at 75%LTV/ARV or less.
LOL yeah FIRE or financial independence retire early has its pros and cons for sure, but the way its marketed is like poppin bottles and laying on the beach all day.
I use this strategy with the private money lenders PML and hard money lenders HML up here in seattle area. Its basically a single loan BRRR to make it more efficient and to not have to wait 6 months to recooperate all of your original money back. The only downside I will say to it is you will have to be able to get your property to appraise but it should go with out saying too.
@Nathan Williams - I have found a major lender that will refi 80% of your overall costs, (purchase, fees, rehab budget), not the LTV. For example, you buy for 70K put in 30k, you can refi for 80% of 100k or get 80k of your initial 100k back out. If the property appraises at 120k you're technically at 66% LTV (80k of the 120k).
I find it's a good option to avoid seasoning and also when you potentially end up with slightly less of an equity spread than originally planned (more on that in the next paragraph). You just need to have the SFH rented or if it's more units you need 80% occupancy. You end up keeping some cash in the deal, but I've found that sometimes thats ok because it gets me majority of the cash back quick and I can also write the mortg on a shorter term for basically the same payment, because it's now not as big as a mortg. I know that's not popular on BP but I do want some of my properties paid down at a quicker rate - that's all personal decisions. It's also strictly third-party fees so cost of refinancing is very low which opens the door to rewrite it after seasoning if you are really gung-ho on eventually pulling all your equity out.
What's weird with this option is you end up get a higher LTV on the property the worst your equity spread is. In the above example if the home only appraised for 100k, you'd still get the 80K and they'd technically be giving you 80% LTV (80/100 instead of 80/120). It's based purely on the cost/rehab unless the appraisal comes in silly low because you've spent more than the home is currently worth.