I’m really interested in real estate and have been for a while. I’ve listened to podcasts, read some books, watched videos and I’m eagerer to get started. My goal is to purchase a 2 family and rent out one of the floors. I’m looking for a place in New Jersey not too far from NY. I don’t have a ton of money saved. I recently found a decent paying job that can fund some of my endeavors.
I would like to try the BRRRR strategy. Where I would find a private money lender that can front me the funds for a percentage of the purchase and rehab cost. After that I would like to refinance and pay off the fees and eventually repeat the process.
I don’t have much experience outside of reading about real estate and private money lenders. I’m wondering if i should try this approach or if I should go purchase a property traditionally that’s turnkey?
One of the biggest hurtles for me is crunching the numbers and figuring out the rehab cost. Any advice?
Rental Property Investor · Member since 2019 · 411 posts · 148 votes
5y
@Rich G. Use your golden ticket. And by golden ticket I mean FHA to get into a multifamily property. Yields best opportunity and quickest start to wealth building
Real Estate Agent · Seattle, WA · Member since 2019 · 301 posts · 188 votes
5y
Hey Rich,
Private money sounds tough for the first deal but certainly can be done.
I think the financing for your first house (and you're going to live in) is so good. You can get some pretty sweet conventional or FHA financing. There are even plenty of down payment assistance programs you could use. That's my vote
@Peter Vander Valk I'm here in Kentucky and looking to purchase more property and interested in the 203(k). What episode on BP talks about this. I have a multifamily opportunity on the table and looking for then funding.
Hi Stan,
I'm not sure if there is a specific episode of the podcast devoted to the 203(k) loan, but it is a type of FHA loan and you will need to owner-occupy. 3.5% down payment (acquisition cost + renovation budget), maximum allowable loan size is determined by county. You will need an FHA consultant if over $35k renovation budget to approve the work and authorize release of the construction draws - if under that (and non-structural work) you can do a Limited 203(k) and won't need one. You will need to use a full-time licensed and insured contractor to do the work. You will also be looking at a longer time to close on this loan type, so in today's market, many sellers aren't as receptive to this type of loan and you have to find the right deal.
Investor · Austin, TX · Member since 2014 · 248 posts · 181 votes
5y
I would go for a turn key property using an FHA loan. You don't have money for extensive repairs and you will not get a hard money loan without a substantial down payment.
Columbia SC · Member since 2019 · 7 posts · 1 vote
5y
@Rich G. I’m currently in the same situation. Been doing a ton of reading, listening and soaking up all the information I can find. Was thinking like you, about using a hard money loan but I don’t plan to live in the property. Honestly haven’t decided if it will be a fix and flip or brrrr, just looking to get that first deal under my belt. Good luck to you!