Stuck in a BRRR NEED HELP! Made a rookie mistake
So I need help figuring this out. I bought this gorgeous brick Duplex right before the market went up for 60k and at the time i purchased it because i had a partner that was going to finance the rehab (35-45k). the ARV is 150-190k but they backed out. I ended up pressing forward with the property and made a rookie mistake being frustrated with my partner backing out, I started gutting the upstairs unit place myself. Later found out from navy fed when i went to get a HELOC that because the unit upstairs was gutted that i couldn't access my equity until the unit is put back together. So Im stuck now trying to find the money to finish the project and access my 100k in equity.
I also own a 3br 1b house free and clear with a long term renter paying 650/mth
please help me figure this out or point me in the right direction on how i can get over this hump and on to my next deal
Well in this case, the solution seems fairly obvious so this may not be of any help to you, but if I were you, I would leverage the 3/1 that you own (cash out refi) and use the $ to renovate the upstairs unit. Access that equity and you can either pay the 3/1 off or continue to leverage yourself. I have a similar scenario except the property I would leverage is not paid off, I have a 3.5% interest rate on it and a cash out refi would give me a 6.5% interest rate. The numbers make sense, but I would rather flip my property and buy another deal than lose my interest rate.
Other options: Depending on the cost of the renovation, you can get a PML or a Personal Loan to finish the rehab and access your equity then pay it back.
Depending on your current (if it is conventional) you can rent the other unit out and repair the top unit slowly and sacrifice the cash flow and return you would get from using leverage to do rehab the property all at once - this is the worst option in my opinion.
If it were me, I would definitely leverage the paid off property though. Good luck!
Thanks for the info ...My thought was exactly the same with my 3br house but the issue is i dont know where to go to get a loan on my investment property. my local bank wouldnt do a heloc on it because i dont live there and i have ran into that issue a couple different times and i ultimately dont want to sell the property if i can use it to leverage. Do you know of any banks or programs that i can reach out to on this ?
Hey Ahmad,
I would have to agree with Taylor here. Using your free and clear property as leverage by doing a cash out refi and renovating the upstairs unit. Then after finishing the rehab, doing a cash out refi on that property or obtaining the HELOC.
@Ahmad Houston is there a reason you can't use a credit card? Otherwise, find a lender (not a bank) but a mortgage broker who knows what is what and leverage the free and clear 3/1. There are plenty on BP. And, deep breaths :) You will learn from this and it will make a great story once you're done.
Quote from @Ahmad Houston:
So I need help figuring this out. I bought this gorgeous brick Duplex right before the market went up for 60k and at the time i purchased it because i had a partner that was going to finance the rehab (35-45k). the ARV is 150-190k but they backed out. I ended up pressing forward with the property and made a rookie mistake being frustrated with my partner backing out, I started gutting the upstairs unit place myself. Later found out from navy fed when i went to get a HELOC that because the unit upstairs was gutted that i couldn't access my equity until the unit is put back together. So Im stuck now trying to find the money to finish the project and access my 100k in equity.
I also own a 3br 1b house free and clear with a long term renter paying 650/mth
please help me figure this out or point me in the right direction on how i can get over this hump and on to my next deal
You can definitely use the free and clear property or you could ask for someone to invest. I give my private money investors 12% interest. Could you ask someone in your network/family/friends? Before you do that though you have to know your plan, how much will it cost, and how long will it take.
Have you tried to get a line of credit or loan on your free and clear property? I'm an advocate of leveraging equity and putting it to work whenever and where ever possible!
Quote from @Steven Foster Wilson:
Quote from @Ahmad Houston:
So I need help figuring this out. I bought this gorgeous brick Duplex right before the market went up for 60k and at the time i purchased it because i had a partner that was going to finance the rehab (35-45k). the ARV is 150-190k but they backed out. I ended up pressing forward with the property and made a rookie mistake being frustrated with my partner backing out, I started gutting the upstairs unit place myself. Later found out from navy fed when i went to get a HELOC that because the unit upstairs was gutted that i couldn't access my equity until the unit is put back together. So Im stuck now trying to find the money to finish the project and access my 100k in equity.
I also own a 3br 1b house free and clear with a long term renter paying 650/mth
please help me figure this out or point me in the right direction on how i can get over this hump and on to my next dealYou can definitely use the free and clear property or you could ask for someone to invest. I give my private money investors 12% interest. Could you ask someone in your network/family/friends? Before you do that though you have to know your plan, how much will it cost, and how long will it take.
The issue is finding a bank that will do a HELOC on a property thats not a primary residence. Do you know of any ?
Hi Amad,
A lot of the guys and gals have already addressed the question directly, and I think this place looks like money maker as is.
So I did a mockup with the foliage cut back and popped in a few more thoughts that came to my mind.
Would these thoughts be money makers, I don't know, as I said before I think it looks good just the way it is--I like it--it looks rentable.
This is just a conceptualization of some of my thoughts--if things cost nothing to do.
Good Luck!
Quote from @Ahmad Houston:
Quote from @Steven Foster Wilson:
Quote from @Ahmad Houston:
So I need help figuring this out. I bought this gorgeous brick Duplex right before the market went up for 60k and at the time i purchased it because i had a partner that was going to finance the rehab (35-45k). the ARV is 150-190k but they backed out. I ended up pressing forward with the property and made a rookie mistake being frustrated with my partner backing out, I started gutting the upstairs unit place myself. Later found out from navy fed when i went to get a HELOC that because the unit upstairs was gutted that i couldn't access my equity until the unit is put back together. So Im stuck now trying to find the money to finish the project and access my 100k in equity.
I also own a 3br 1b house free and clear with a long term renter paying 650/mth
please help me figure this out or point me in the right direction on how i can get over this hump and on to my next dealYou can definitely use the free and clear property or you could ask for someone to invest. I give my private money investors 12% interest. Could you ask someone in your network/family/friends? Before you do that though you have to know your plan, how much will it cost, and how long will it take.
The issue is finding a bank that will do a HELOC on a property thats not a primary residence. Do you know of any ?
I can send you a list of lenders.
Hey Ahmad,
Did you purchase the property cash or did you purchase with a loan?
The rehab to purchase price is kind of high, but it would likely be possible to finance the rehab if there is equity in the building as is.
#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
- 15,918
- Votes |
- 10,168
- Posts
#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
Quote from @Ahmad Houston:
I also own a 3br 1b house free and clear with a long term renter paying 650/mth
Finding a bank that will do a HELOC on a property thats not a primary residence. Do you know of any
You are looking for an equity loan or line of credit.
No loan to 'refi' and it's not your home so no H in Heloc. Equity loan or line👍
See if you can get a project loan from Home Depot. They give you a 6 month at interest only 'buying period' where you can purchase materials for your job up to some limit (we usually got 15-20k) and after 6 months you can't buy anymore and the loan converts to a 7 year fixed rate loan. Last year the rates were between 6-7%.
Thank you all so much, I was super overwhelmed yesterday and you all have given me so much informatio. I was able to find a bank to do the heloc and im going to be reach out to a couple of you for some additional resources .. thank you all again
Quote from @Scott Mac:
Hi Amad,
A lot of the guys and gals have already addressed the question directly, and I think this place looks like money maker as is.
So I did a mockup with the foliage cut back and popped in a few more thoughts that came to my mind.
Would these thoughts be money makers, I don't know, as I said before I think it looks good just the way it is--I like it--it looks rentable.
This is just a conceptualization of some of my thoughts--if things cost nothing to do.
Good Luck!
Hey Scott this is really cool im not sure how you did it but would you be willing to put something like this together for me to present to investors because i all some ideas similar to what you already conceptualized and would like to have that to show them ...or just tell me what program you used to create it
Gimp, it's free.
- Rental Property Investor
- Boston, Massachusetts (MA)
- 2,236
- Votes |
- 2,363
- Posts
@Ahmad Houston good luck! Out of curiosity why and when did your partner back out? Did you have any written agreement?
I think it would be valuable for folks to hear about it
I would talk to a commercial bank and wrap a mortgage to both properties. If they aren't in an LLC in Ohio at closing you usually just deed transfer at the time of closing.
You might be able to structure it too where you won't need to do a refi after the rehab of the duplex. So essentially get enough debt from both properties to pay off debt for duplex and finish rehab on it. As long as commercial bank knows that some of the money will be used for the completion of the double you should be able to get new debt for it.
If going this route make sure you get more permanent financing (longer time before ARM) so no need for refi!