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Updated about 6 years ago on . Most recent reply

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Andrew Rudahl
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Is this a viable strategy?

Andrew Rudahl
Posted

A friend and I are both looking at starting a partnership. The idea is we would split a 20% down payment and then after closing, his parents would cash us out and get either 20% equity or no equity but a great guaranteed interest rate. This way we would be able to scale infinitely just like the BRRRR method. However, we could do it on any property does not need to be a big rehab project. Also less dealing with banks and no appraisal risk. Would this work? What would the best way be to execute something along these lines? Thanks in advance for any advice!

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

You’re going to be putting down more than 20% on investment properties, plus closing costs.

You and your partner’s income will have be sufficient to qualify for the 75% or so mortgages.

It will be extremely difficult to break even cash flow with 100% financing unless you are buying really well.

Part of the reason the brrr works, when it works, is because you have to have a really good deal to begin with, in order to refinance out all your costs and Still have your loan at 76% of value, not at 100% of value.

You Will need some reserve cash for unexpected repairs, vacancies, etc.

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