Bronx, NY · Member since 2016 · 50 posts · 32 votes
Hi everyone :) someone may have already asked this question so please link the thread below if so.
What is the best way to finance a BRRRR in your opinion? HML? Private money?
I was leaning more towards HML but I'm worried about not having the required personal funds to use it to pay for: points, interest and origination fees. Does someone have a ratio perhaps of if they are borrowing X amount from a HML, they make sure they have Y amount in their own cash reserves to account for these costs? (On top of whatever % LTV they need to pay to use HML in the first place).
Wow only $10,000 left in the deal is great. 70% ARV financing is really solid but I'm sure you have proved yourself reliable for that lender to be getting that sort of deal right? I don't currently live in the market that I want to invest in so I'm thinking about using the bank's leverage for my next property because I plan on living in it (will still shoot for a duplex or triplex to house hack). Once I'm in the area and settled, then I will look to find a mentor. I'm reading David's BRRRR book and he always talks about bringing value first and making yourself worth someone's time so I definitely agree with you there!!
--Mary the 70% refi is just a conventional cash out refi - and it just changed from a rate/term refi to a cash out - the mechanics of lending! - but 70% is only a 5k different than 75% so it's not a big deal.
I saw your post about your plans with house hacking something you'll by to live in w/conventional - go for it. This is a business that rewards experience and there is no reason to get creative until you understand how that all works. Just keep learning. Good luck!
Oh I misunderstood! I thought you meant your private lender finances you up to 70% of what your expected ARV of the property will be after completion. Oops :) yes! I think I'm going to refi out of the FHA i have now on my fourplex into a conventional loan and reuse FHA on a duplex or triplex. After speaking with others, it seems conventional mortgages with little money down for multi families are not possible. I'm all about using bank leverage for the time being to at least acquire some doors in the meantime until I feel comfortable to try out a BRRRR.