BRRRR question... funding

[Richard McCaig II]

New guy here looking to get into my first rental and a thought popped into my mind that I have no answer for.

The house I am looking at is $110,000. I am planning on using 20k to update the house. When I get a mortgage loan and we're at closing, do I just tell my agent whats happening and they'll have the check of 20k ready for me, and the rest of the money would just go to the old owner? Basically my mind doesn't know or understand how I would get my rehab money as I've never rented before and usually at closing all of the money goes to the seller...

Sorry for the basic question. Thanks for your help!

[Scott Wolf]

Originally posted by @Richard McCaig II:

Billy,

My overall goal was to try to pay down the loan asap by using the cashflow from the property to make extra payments, which if my research was correct isnt the best if I had a commercial loans as theres typically fees associated with doing that. Just to clarify, my first couple years my plan is to save all cashflow in order to have a nest egg for cap-ex, etc. Then make extra payments. The cashflow, dependent on a few factors should be between 200-450 a month. The biggest factor of that is property taxes, which I cant predict but I have done the numbers from way too high to what I think they should be, and that's where I lie.

With all that being said, I dont have to do that of course. I have not done much research at all towards the commercial loan aspect of things, but will dig in today to see how it looks. Never too many options to look at

 Have you looked into a 203k loan?  It lets you roll the reno (upt to 85K I believe) into the loan.  Matt Porcaro is an expert in this.