Howdy from Los Angeles and Austin Tx.

7 Replies

Howdy, my name is Koby Kramer and I am looking to learn more about real estate investing. I currently live in work in Los Angeles but consider Austin to be home. I own one place in Austin that I work out of when I'm home but I bought it for my Grandparents and mother to live in. Given the pandemic and my ability to work remotely, I'm currently looking at relocating from Beverly Hills to Austin but recently hit a roadblock with the lending. Your primary residence cannot be with 100 miles of the second residence so figured now is the time to post and ask what BP knowledge people have. I'd like to move to Austin and purchase a primary residence that I BRRRR and move back to Los Angeles when the virus is done with. A pleasure to meet y'all!

@Koby Kramer If you are planning to BRRRR, you likely won't use traditional lending on the purchase. You would be better off using a hard money loan or private money, then complete your renovations, lease the property, then refinance into a traditional loan. You aren't buying it as a vacation home, or second home, which the traditional lender is assuming. I hope this makes sense. If you want any info on the Austin market, reach out anytime.

Originally posted by @Ryan Kelly :

@Koby Kramer If you are planning to BRRRR, you likely won't use traditional lending on the purchase. You would be better off using a hard money loan or private money, then complete your renovations, lease the property, then refinance into a traditional loan. You aren't buying it as a vacation home, or second home, which the traditional lender is assuming. I hope this makes sense. If you want any info on the Austin market, reach out anytime.

Thanks bro! This does make alot of sense. Regarding the Austin Market, would you say BRRRR is even a possibility?

 

@Koby Kramer that sounds correct per federal guidelines.  You should be able to purchase as an investment property but not as another primary home.  

But for the sake of discussion, ask your lender if their underwriting department had a letter of explanation stating that you bought the house but your mother and grandparents currently reside there (and have for some time) would that work? You can absolutely only claim one homestead exemption, but people relocate within the city of Austin all the time and have 2 active mortgages, one for each property. I would absolutely trust your lender here to know those rules and to avoid mortgage fraud. Any Texas lenders care to weigh in?

@Bryan Noth Thanks for the clarification. I would have suspected the same, but Ryan does have a good point about being able to BRRR it with hard money. I can absorb the principal and interest payments on the hard money loan with my net monthly income, no issues there. The challenges will be in finding a property to live in while the rehab is happening and not getting something that is in way over my head. I appreciate yalls help and will speak to the lender about that.

@Koby Kramer A 100% BRRRR is very challenging in Austin as inventory is tight and prices are high. It's not impossible, but requires finding an off-market steal which everyone is looking for. If you can refinance out some or most of your initial investment, that's a great win and will create a nice investment.

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