Trying my hand at BRRRR long distance

Riverside, California
New Member Introductions
1yFollow

Trying my hand at BRRRR long distance

John NoceraPro Member
Member since 2025 · 8 posts · 4 votes

So far, I'm reading Bigger Pockets publications and considering leveraging my house with a HELOC to get started. I feel like I'm on thin ice risking my home! I plan on being brave and looking for distressed property. Cash (sort of) to buy and rehab my first multi-family or single-family home.

3Reply
144 views

Most Popular Reply

Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
1y

John,

I am going to offer some advice as a long time investor and Mortgage Banker. Do not take out a Heloc instead go for the Cash out refinance. You may a have a lower rate on the first mortgage if you have one but in 90% of the cases a cash out refinance is the better option.

For one it allows you to have one mortgage and avoid multiple liens on title and multiple trade lines on credit. In certain situations additional lien on credit and excessive trade lines can cause future DTI issues, lower scores and denials on future loans.

The rates our lower on mortgages versus Heloc right now and the terms are longer for example 30 year mortgage versus a 8-10 year Heloc and most carry prepayment penalties so if you want to pay it off early they can hit you with a prepay penalty of 6% or higher.

Refinance allows you to have cash in hand and avoid the scary "What if" factor meaning loss job, lost income, late payment, over leveraged and if any of these things happen your credit limit gets reduced and in most cases closed completely. Cash out refinance if something happen you just have cash in savings!

If you ever want to talk REI or have questions feel free to reach out I would be happy to help and show you examples to avoid lost time and money.

[email protected]727-637-4289
2Reply
See this reply in the discussion

16 Replies

Jump to latestLatest
  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    1y

    John,

    I am going to offer some advice as a long time investor and Mortgage Banker. Do not take out a Heloc instead go for the Cash out refinance. You may a have a lower rate on the first mortgage if you have one but in 90% of the cases a cash out refinance is the better option.

    For one it allows you to have one mortgage and avoid multiple liens on title and multiple trade lines on credit. In certain situations additional lien on credit and excessive trade lines can cause future DTI issues, lower scores and denials on future loans.

    The rates our lower on mortgages versus Heloc right now and the terms are longer for example 30 year mortgage versus a 8-10 year Heloc and most carry prepayment penalties so if you want to pay it off early they can hit you with a prepay penalty of 6% or higher.

    Refinance allows you to have cash in hand and avoid the scary "What if" factor meaning loss job, lost income, late payment, over leveraged and if any of these things happen your credit limit gets reduced and in most cases closed completely. Cash out refinance if something happen you just have cash in savings!

    If you ever want to talk REI or have questions feel free to reach out I would be happy to help and show you examples to avoid lost time and money.

    [email protected]727-637-4289
    2Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    1y

    Thank you!  Let me dig deeper into loan options...  I'll be in touch for that help.  Much appreciated.

    0Reply
  • Sean GrahamBusiness Member
    Investor , CPA · Detroit, MI · Member since 2016 · 582 posts · 248 votes
    1y

    Welcome, John!

    Maven Cost Segregation Tax Advisors555 Reviews
    WebsiteView Page
    0Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    1y

    Woot, woot!

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    11mo

    @John Nocera

    Hi.  Still around?  I'm happy to try to talk you out of this if you are =)

    1Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    11mo
    The HELOC? I’m still trying to get that set. I got a good rate. What should I do instead?
    0Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    11mo

    Well, I just got off the phone with my bank.  They couldn't get the loan closed for reasons that had nothing to do with me.  They just weren't a good fit for investing.  So, I'm back at square zero!  I wanted to thank all the folks that replied to this post, but I think I need to take a step back and look at better options.

    0Reply
  • Shane J. RenardBusiness Member
    Real Estate Broker · Green Bay WI · Member since 2021 · 65 posts · 28 votes
    11mo

    Welcome abroad @John Nocera. Here to help. Currently what are you struggling with?

    0Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    11mo

    Oh, my HELOC fell out of my favor so i withdrew. I'm now going to try to do a self directed IRA...

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    11mo

    @John Nocera

    Hi again.  What is that you're trying to accomplish?  I would not start by investing your SDIRA in RE.  That's an advanced strategy, not a beginner one.

    Hope this helps

    1Reply
  • Joey BanasihanPro Member
    Investor · Boise, ID · Member since 2019 · 233 posts · 188 votes
    11mo

    Hey @John Nocera, long distance BRRRR is a great way to build a real estate portfolio. Whether you use a HELOC, or cash out refinance, it just depends on the each property/situation. The biggest part is taking action and not waiting on the sidelines for the "perfect" opportunity. Our team helps 30-40 clients each year with brrrr projects, many from CA, happy to chat more if you want to learn more!

    [email protected]
    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    11mo

    There is no secret strategy or secret markets. Save money, invest in quality assets, and wait. Please don't do a SDIRA or borrow against your primary residence to do an out of state BRRRR. It is not going to work, and the only people that will tell you it is a good idea are those with something to sell.

    1Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    11mo

    Travis, that is sound advice. I read a book that talked about a guy like me: books and talking a lot but not pulling the trigger. Part of me wants to show that I'm a bad *** real estate investor. But it's scary and I got no real capital. The SDIRA idea is because I have plenty in a pension from a previous life and it will never amount to anything if I don't take control. I may or may not put it in real estate. Probably will. The HELOC as I started this post made me nervous from the gate. So waiting as you've indicated is the best plan because I can save a chunk from my W2. I'm not in a hurry but I need to break the seal with my first deal. I'm an engineer with an MBA so complexity isn't a concern. But you've nailed it by essentially stating the old adage "you make money when you buy right." I love all you folks that are keeping me honest.

    0Reply
  • Teresa BoykinPro Member
    Member since 2025 · 14 posts · 8 votes
    11mo

    @John Nocera

    I see that you're now looking into investing in real estate with an SDIRA. If that's the route you choose to go and you need additional funding, you may want to look into non-recourse financing. If you default, then the only recourse is the property itself, so your other assets aren't at risk.

    0Reply
  • John NoceraPro Member
    OP
    Member since 2025 · 8 posts · 4 votes
    8mo

    Ok.  I did it!  Not through my SDIRA because @Teresa Boykin was right about how to do it and @Travis Timmons was right SDIRAs are tough in real estate.

    But I'm under contract...  Thanks to all that helped me make this first step.

    1Reply
  • Jordan BinghamPro Member
    Atlanta, GA · Member since 2023 · 3 posts · 0 votes
    8mo

    @John Nocera  If you don't mind me asking, how did you end up financing your deal?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free