BRRRR Refinance Interest rates
Hello all,
I am curious as to what is everyone's experience using the BRRRR method right now that the interest rates are higher? I just completed a BRRRR and left about $8,000 into the deal. I used a DSCR loan on my refi and my rate was 7%.
I've been analyzing SFR, in San Antonio, and it seems like its harder to cash flow with those type of properties because of the interest rates causing the mortgage payment to be higher. What are you guys doing to combat this? Buying lower priced properties or focusing more on multi family units?
This is the second investment property I own, but seems like I've hit a wall due to the higher interest rates.
Any advice would be greatly appreciated!
Your questions raises its ugly head every time we enter a period of rising interest rates. Just before rates rise, values rise, signaling a maturing inflationary cycle. So, when rates rise, you have the double whammy of higher prices combined with higher interest rates. This is why the real estate market will have to shake out. Your question is how do I prosper in a market place of higher prices and higher interest rates? (Well for now at least the rental rates have also risen.)
The current emerging market requires investors to be more savvy. Just going to the MLS and buying a property and rehabbing it will not work. You will have to look for off market properties, estate sales, foreclosures and distressed properties in order to buy at a value which will support a BRRR strategy. Th rising rate environment will wash out all of the Johnny come lately investors who always appear at the end of a long up cycle. Who isn't a real estate investor these days?
Higher rates make it harder for sellers to sell, and buyers to buy. So this will create opportunities to buy distressed properties with seller financing etc. If you learn how to negotiate the rising rate environment than the normal market will seem like kids play. If real estate is your calling than the market forces are just challenges waiting to be met! Good luck.
@Jonathan Perez Have you taken a look at 40 yr fixed and ARM options? There are some options that can do it based off DSCR.
What is a DSCR?
Quote from @Forrest T Schue:
What is a DSCR?
They qualify you based on the cashflow of the property, credit score, and property ownership history. Only for non-owner occupied properties.
Quote from @Erik Estrada:cool thanks Erik
Quote from @Forrest T Schue:
What is a DSCR?
They qualify you based on the cashflow of the property, credit score, and property ownership history. Only for non-owner occupied properties.
How long was your seasoning period?
Quote from @Jonathan Perez:
Hello all,
I am curious as to what is everyone's experience using the BRRRR method right now that the interest rates are higher? I just completed a BRRRR and left about $8,000 into the deal. I used a DSCR loan on my refi and my rate was 7%.
I've been analyzing SFR, in San Antonio, and it seems like its harder to cash flow with those type of properties because of the interest rates causing the mortgage payment to be higher. What are you guys doing to combat this? Buying lower priced properties or focusing more on multi family units?This is the second investment property I own, but seems like I've hit a wall due to the higher interest rates.
Any advice would be greatly appreciated!
How long was your seasoning?
That rate seems right for a DSCR, but if this is only your second property, why are you not using a traditional mortgage and saving a point?
Quote from @Brandon Baker:
That rate seems right for a DSCR, but if this is only your second property, why are you not using a traditional mortgage and saving a point?
Hello Brandon,
I’m investing out of state and the reason I don’t use traditional mortgage is because of the seasoning period with traditional mortgages
Quote from @Brett Tvenge:
How long was your seasoning period?
Quote from @Jonathan Perez:
Hello all,
I am curious as to what is everyone's experience using the BRRRR method right now that the interest rates are higher? I just completed a BRRRR and left about $8,000 into the deal. I used a DSCR loan on my refi and my rate was 7%.
I've been analyzing SFR, in San Antonio, and it seems like its harder to cash flow with those type of properties because of the interest rates causing the mortgage payment to be higher. What are you guys doing to combat this? Buying lower priced properties or focusing more on multi family units?This is the second investment property I own, but seems like I've hit a wall due to the higher interest rates.
Any advice would be greatly appreciated!
How long was your seasoning?
My seasoning period was supposed to be 6 months. The lender allowed me to close before that using a DSCR loan, but I did take a quarter point hit for closing before owning the property 6 months.
Quote from @Jonathan Perez:
Quote from @Brandon Baker:
That rate seems right for a DSCR, but if this is only your second property, why are you not using a traditional mortgage and saving a point?
Hello Brandon,
I’m investing out of state and the reason I don’t use traditional mortgage is because of the seasoning period with traditional mortgages
Fyi, I used a traditional mortgage and closed before 6 months. It's actually within the guidelines, the problem is most traditional lenders don't understand it. So, it works like this: you have a house that will ARV for 100K, you purchase for 50K, and plan to rehab at 25K. When you show up to close, you have to bring the purchase price 50K, plus rehab budget of 25K, which is 75K total to closing. The 25k goes into repair escrow. This allows you to cheat the 6 month seasoning period.
Quote from @Brandon Baker:
Quote from @Jonathan Perez:
Quote from @Brandon Baker:
That rate seems right for a DSCR, but if this is only your second property, why are you not using a traditional mortgage and saving a point?
Hello Brandon,
I’m investing out of state and the reason I don’t use traditional mortgage is because of the seasoning period with traditional mortgages
Fyi, I used a traditional mortgage and closed before 6 months. It's actually within the guidelines, the problem is most traditional lenders don't understand it. So, it works like this: you have a house that will ARV for 100K, you purchase for 50K, and plan to rehab at 25K. When you show up to close, you have to bring the purchase price 50K, plus rehab budget of 25K, which is 75K total to closing. The 25k goes into repair escrow. This allows you to cheat the 6 month seasoning period.
Hey Brandon,
Thank you for that info. Is there a specific name for that type of loan? Is it delayed financing? I’d like to ask Around and see who offers that
Quote from @Jonathan Perez:
Quote from @Brandon Baker:
Quote from @Jonathan Perez:
Quote from @Brandon Baker:
That rate seems right for a DSCR, but if this is only your second property, why are you not using a traditional mortgage and saving a point?
Hello Brandon,
I’m investing out of state and the reason I don’t use traditional mortgage is because of the seasoning period with traditional mortgages
Fyi, I used a traditional mortgage and closed before 6 months. It's actually within the guidelines, the problem is most traditional lenders don't understand it. So, it works like this: you have a house that will ARV for 100K, you purchase for 50K, and plan to rehab at 25K. When you show up to close, you have to bring the purchase price 50K, plus rehab budget of 25K, which is 75K total to closing. The 25k goes into repair escrow. This allows you to cheat the 6 month seasoning period.
Hey Brandon,
Thank you for that info. Is there a specific name for that type of loan? Is it delayed financing? I’d like to ask Around and see who offers that
I heard someone else call it delayed financing, but my lender just says it's a way around the seasoning period. Again, nothing illegal, just creative. PM me if you want lender info, I'll make the connection.