Point me in the right direction please!

3 Replies

Here is my situation.  I own a home est. value is 315k and owe 224k with 4% interest. I found a short sale triplex in the area I am interested in. 

They are asking 69k, taxes are 3800, comps are around 150k. Looks like it needs TLC. I have about 15-20k for down payment but I'm also thinking about the equity I already have. I'm thinking to BRRR this property but feel like there are a lot of moving parts.

I figured using 20 bucks a square foot for a reno is about 44k. That would put me at about 113k for a loan. Refinance at 150k ARV and take out what I put in. Any ideas or guidance for me? Thanks!

@Gabriel DeSantis , those numbers look very tight. Even if a HELOC would give you up to 90% of your homes appraisal (say an extra $50k in your pocket), typically, a refi on the rental will only get you back 70% of its appraisal ie. no more than $105k which means NO refi; also, no REPEAT!

Personally, I reckon a 90% HELOC would be asking for trouble down the line too.

And you're already leveraged at more than 70%! Yes, very tight. Others: too tight?...

@Brent Coombs, Hmm maybe I'm looking at this incorrectly. My idea was to HELOC my current home at around 80% which should give me about 28k. Use that 28k as the down payment on a 113k mortgage. Then take the excess 44k for reno. Refi after reno with a est. value of 150k but for a 141k loan and take the excess back to pay off the HELOC.

Thank you for helping me out but does this sound wrong?

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@Gabriel DeSantis , that you already have up to $20k deposit will help; add the $28k HELOC and you'll only need to borrow an extra $65k to cover the balance and rehab (but likely $75k if you don't quite have $20k; and, fees), that's IF the Sellers' Lender agrees to let it go for $69k!

My concern was to do with you spending $113k on a home even though it should appraise at $150k, when for BRRRR, your all-in cost should be no more than $105k in order to be able to get all of your own cash back on refi. You'll be needing an investor-friendly Lender. Good luck!...