Flipping a house then refinance the house and making a Rental Property

[Eugene Angeloni]

Hello BP,

I had this thought the other day and am not sure of its legal issues so I figured I would ask the BP community.

Say I find a house that I am planning on using private equity to purchase and fund the rehab, which lets say is gonna cost in total $90,000.

The house also happens to be in a great location for a rental property.

So as the house comes to completion I now realize that I would like to hold the property rather than sell it. Problem is I do not have $90,000 however my house has now been appraised at lets say $120,000.

Is it possible for me to get a mortgage/refinance the house?

Allowing me to take the $120,000 my house is worth to pay my rehab fees, $90,000, and pay the 10% due on the mortgage, $12,000 and keep the house.

Thus I have a quick profit of $18,000 while still keeping the property and using rental income to pay of my mortgage, thus building longer term wealth.

[Brandon Turner]

I agree with what Matt said. I've done this strategy a number of times, and yeah, 80% is the best I've seen. It is a great way to get a rental property with no money down but it can be a lot of work. Good luck!