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BRRRR - Buy, Rehab, Rent, Refinance, Repeat

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Roscoe Deel
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  • Key West, FL
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BRRRR with a quit claim deed?

Roscoe Deel
Pro Member
  • Key West, FL
Posted Jun 2 2022, 09:23

Hello everyone! So I'm looking to buy a property from my cousins they inherited and want nothing to do with. It needs a lot of work. My plan: I wanted to do a quit claim deed to take possession of the property with no upfront cost so I could secure a personal loan to do the renovations. Once that is completed, I would get renters in for a couple months to show income. From there I would get a cash out refinance to payback the loan and my cousins for the property. My question is, do I need to get a real estate agent, go through a title company, or hire a real estate attorney to draw up a contract? What would the best route be? Thanks in advance for any help.

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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jun 2 2022, 09:39

@Roscoe Deel, Sounds like a recipe for disaster in some ways.

You are asking your cousins to give you the house for $0 and TRUST that you will successfully rehab it, rent it, and refinance it and MAYBE if all of those things work out pay them back even though you have no legal requirement to do so at that time.

You could go the traditional route of getting a hard money loan to buy the house from them up front and have money from that to rehab it. Then the cousins are paid and out of the picture up front.

Or if you really want your cousins to take on some of the risk here, they could add you to the deed so they are still on it. You rehab it and rent it and buy them out at the end when you get your loan. This way they are basically your silent (limited) partners. They aren't giving you the house for free up front.

You should make sure there are no title issues associated with the inheritance up front as well and make sure you can get funds for the rehab you want before you move forward. 

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Mike Hern
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  • Scottsdale Austin Tuktoyaktuk
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Mike Hern
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  • Investor
  • Scottsdale Austin Tuktoyaktuk
Replied Jun 2 2022, 10:06
Quote from @Roscoe Deel:

Hello everyone! So I'm looking to buy a property from my cousins they inherited and want nothing to do with. It needs a lot of work. My plan: I wanted to do a quit claim deed to take possession of the property with no upfront cost so I could secure a personal loan to do the renovations. Once that is completed, I would get renters in for a couple months to show income. From there I would get a cash out refinance to payback the loan and my cousins for the property. My question is, do I need to get a real estate agent, go through a title company, or hire a real estate attorney to draw up a contract? What would the best route be? Thanks in advance for any help.

It's very unlikely you can get a personal loan on the property using a quit claim deed based on a deceased owner. The cousins aren't the owner yet and they can't sign a quit claim deed until probate is completed. You don't want a quit claim deed anyway for a lot of reasons. You want a Warranty Deed.

The first thing I would do is order a title report to see who is actually on title, what outstanding loans and liens and fines and taxes might be owed. If the title is "clean" or can be made "clean" then you proceed.

You would do an "owner financing" deal, once probate is completed.

Then set up escrow, decide on your price and terms. The cousins become the bank. Say it's $100,000 @ 4% for a 30 year loan, zero down, which is about $518.67 a month . You make no payments and that gets added to the eventual payoff. Or you can do a $100,000 zero down with no payments with the note due in 10 years or whatever ya'll agree to.

An attorney can help you with the note and mortgage. You don't need a real estate agent and an agent likely wouldn't know how to do this part anyway.
At escrow, the agent (or attorney) will take care of the rest of the transation so you all are protected and you will be able to find financing for your project.

Contact a mortgage broker (not a bank. Banks won't finance this type of deal) and run the scenario by them for advice on how to structure things so they can finance you when the time is right. Most lenders want some seasoning of a few months before they will provide financing. You may also find that someone in town (friend, family, doctor, dentist) has a pension fund or 401(k) they can fund your project with. Don't limit yourself to banks and mortage lenders.
Make sure you buy Homeowner's Insurance and pay the proeprty taxes.

This is the simplified version, your attorney will fill you in on the details.

Congratulations, sounds like a winner for all concerned.

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Roscoe Deel
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Roscoe Deel
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  • Key West, FL
Replied Jun 2 2022, 10:31
Quote from @Kevin Sobilo:

@Roscoe Deel, Sounds like a recipe for disaster in some ways.

You are asking your cousins to give you the house for $0 and TRUST that you will successfully rehab it, rent it, and refinance it and MAYBE if all of those things work out pay them back even though you have no legal requirement to do so at that time.

You could go the traditional route of getting a hard money loan to buy the house from them up front and have money from that to rehab it. Then the cousins are paid and out of the picture up front.

Or if you really want your cousins to take on some of the risk here, they could add you to the deed so they are still on it. You rehab it and rent it and buy them out at the end when you get your loan. This way they are basically your silent (limited) partners. They aren't giving you the house for free up front.

You should make sure there are no title issues associated with the inheritance up front as well and make sure you can get funds for the rehab you want before you move forward. 


 @Kevin Sobilo, there is definitely going to be a contract in place before anything happens. I'm just looking for the best way to go about this so all parties involved come out winners.

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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jun 2 2022, 10:36
Quote from @Mike Hern:
Quote from @Roscoe Deel:

Hello everyone! So I'm looking to buy a property from my cousins they inherited and want nothing to do with. It needs a lot of work. My plan: I wanted to do a quit claim deed to take possession of the property with no upfront cost so I could secure a personal loan to do the renovations. Once that is completed, I would get renters in for a couple months to show income. From there I would get a cash out refinance to payback the loan and my cousins for the property. My question is, do I need to get a real estate agent, go through a title company, or hire a real estate attorney to draw up a contract? What would the best route be? Thanks in advance for any help.

It's very unlikely you can get a personal loan on the property using a quit claim deed based on a deceased owner. The cousins aren't the owner yet and they can't sign a quit claim deed until probate is completed. You don't want a quit claim deed anyway for a lot of reasons. You want a Warranty Deed.

The first thing I would do is order a title report to see who is actually on title, what outstanding loans and liens and fines and taxes might be owed. If the title is "clean" or can be made "clean" then you proceed.

You would do an "owner financing" deal, once probate is completed.

Then set up escrow, decide on your price and terms. The cousins become the bank. Say it's $100,000 @ 4% for a 30 year loan, zero down, which is about $518.67 a month . You make no payments and that gets added to the eventual payoff. Or you can do a $100,000 zero down with no payments with the note due in 10 years or whatever ya'll agree to.

An attorney can help you with the note and mortgage. You don't need a real estate agent and an agent likely wouldn't know how to do this part anyway.
At escrow, the agent (or attorney) will take care of the rest of the transation so you all are protected and you will be able to find financing for your project.

Contact a mortgage broker (not a bank. Banks won't finance this type of deal) and run the scenario by them for advice on how to structure things so they can finance you when the time is right. Most lenders want some seasoning of a few months before they will provide financing. You may also find that someone in town (friend, family, doctor, dentist) has a pension fund or 401(k) they can fund your project with. Don't limit yourself to banks and mortage lenders.
Make sure you buy Homeowner's Insurance and pay the proeprty taxes.

This is the simplified version, your attorney will fill you in on the details.

Congratulations, sounds like a winner for all concerned.

A personal loan is unsecured debt not associated with a property. I believe the reason the poster doesn't want to use a loan to purchase is because the debt payment would keep him from getting a personal loan same with owner financing.

Also, there are 2 kinds of warranty deeds a general warranty deed guaranteeing title back to the beginning of time and a special warranty. I don't think you are getting a general warranty from an estate and a special warranty is useless because the people signing the deed didn't own it for any length of time. A quit claim deed and title insurance are probably sufficient but it is probably a reasonable question to ask a lawyer.

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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jun 2 2022, 10:39
Quote from @Roscoe Deel:
Quote from @Kevin Sobilo:

@Roscoe Deel, Sounds like a recipe for disaster in some ways.

You are asking your cousins to give you the house for $0 and TRUST that you will successfully rehab it, rent it, and refinance it and MAYBE if all of those things work out pay them back even though you have no legal requirement to do so at that time.

You could go the traditional route of getting a hard money loan to buy the house from them up front and have money from that to rehab it. Then the cousins are paid and out of the picture up front.

Or if you really want your cousins to take on some of the risk here, they could add you to the deed so they are still on it. You rehab it and rent it and buy them out at the end when you get your loan. This way they are basically your silent (limited) partners. They aren't giving you the house for free up front.

You should make sure there are no title issues associated with the inheritance up front as well and make sure you can get funds for the rehab you want before you move forward. 


 @Kevin Sobilo, there is definitely going to be a contract in place before anything happens. I'm just looking for the best way to go about this so all parties involved come out winners.

@Roscoe Deel, a sales contract to buy the house will be over when they sign the deed. Paying them later would be a separate contract and what happens if you aren't able to follow through. They end up suing and foreclosing on the house? Very expensive and messy.

These sort of things happen all of the time. Doing "business" with friends and family is tricky enough without leaving things open to such a messy end game. Just not the way I would structure a deal like that. 

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Roscoe Deel
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  • Key West, FL
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Roscoe Deel
Pro Member
  • Key West, FL
Replied Jun 2 2022, 10:39
Quote from @Mike Hern:
Quote from @Roscoe Deel:

Hello everyone! So I'm looking to buy a property from my cousins they inherited and want nothing to do with. It needs a lot of work. My plan: I wanted to do a quit claim deed to take possession of the property with no upfront cost so I could secure a personal loan to do the renovations. Once that is completed, I would get renters in for a couple months to show income. From there I would get a cash out refinance to payback the loan and my cousins for the property. My question is, do I need to get a real estate agent, go through a title company, or hire a real estate attorney to draw up a contract? What would the best route be? Thanks in advance for any help.

It's very unlikely you can get a personal loan on the property using a quit claim deed based on a deceased owner. The cousins aren't the owner yet and they can't sign a quit claim deed until probate is completed. You don't want a quit claim deed anyway for a lot of reasons. You want a Warranty Deed.

The first thing I would do is order a title report to see who is actually on title, what outstanding loans and liens and fines and taxes might be owed. If the title is "clean" or can be made "clean" then you proceed.

You would do an "owner financing" deal, once probate is completed.

Then set up escrow, decide on your price and terms. The cousins become the bank. Say it's $100,000 @ 4% for a 30 year loan, zero down, which is about $518.67 a month . You make no payments and that gets added to the eventual payoff. Or you can do a $100,000 zero down with no payments with the note due in 10 years or whatever ya'll agree to.

An attorney can help you with the note and mortgage. You don't need a real estate agent and an agent likely wouldn't know how to do this part anyway.
At escrow, the agent (or attorney) will take care of the rest of the transation so you all are protected and you will be able to find financing for your project.

Contact a mortgage broker (not a bank. Banks won't finance this type of deal) and run the scenario by them for advice on how to structure things so they can finance you when the time is right. Most lenders want some seasoning of a few months before they will provide financing. You may also find that someone in town (friend, family, doctor, dentist) has a pension fund or 401(k) they can fund your project with. Don't limit yourself to banks and mortage lenders.
Make sure you buy Homeowner's Insurance and pay the proeprty taxes.

This is the simplified version, your attorney will fill you in on the details.

Congratulations, sounds like a winner for all concerned.


@Mike Hern, I believe the probate is over. She said she only had to do small estate because she was already the owner of the land the house sits on. Would a Warranty Deed still be the best route? As far as the title report, I would just go through a title company for that, correct? With owner financing, we were looking at doing a deal that involved the ARV. Something like if it appraised under 200K I would give say 70K, if over 200K, I would give 85K.

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Roscoe Deel
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  • Key West, FL
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Roscoe Deel
Pro Member
  • Key West, FL
Replied Jun 2 2022, 16:32
Quote from @Kevin Sobilo:
Quote from @Roscoe Deel:
Quote from @Kevin Sobilo:

@Roscoe Deel, Sounds like a recipe for disaster in some ways.

You are asking your cousins to give you the house for $0 and TRUST that you will successfully rehab it, rent it, and refinance it and MAYBE if all of those things work out pay them back even though you have no legal requirement to do so at that time.

You could go the traditional route of getting a hard money loan to buy the house from them up front and have money from that to rehab it. Then the cousins are paid and out of the picture up front.

Or if you really want your cousins to take on some of the risk here, they could add you to the deed so they are still on it. You rehab it and rent it and buy them out at the end when you get your loan. This way they are basically your silent (limited) partners. They aren't giving you the house for free up front.

You should make sure there are no title issues associated with the inheritance up front as well and make sure you can get funds for the rehab you want before you move forward. 


 @Kevin Sobilo, there is definitely going to be a contract in place before anything happens. I'm just looking for the best way to go about this so all parties involved come out winners.

@Roscoe Deel, a sales contract to buy the house will be over when they sign the deed. Paying them later would be a separate contract and what happens if you aren't able to follow through. They end up suing and foreclosing on the house? Very expensive and messy.

These sort of things happen all of the time. Doing "business" with friends and family is tricky enough without leaving things open to such a messy end game. Just not the way I would structure a deal like that. 


The house is paid off so they have no mortgage. Do you think trying to get a mortgage loan that includes the cost of the renovation and the amount they want would be a better option?