Paterson, NJ · Member since 2016 · 119 posts · 18 votes
Hello,
i just got per-approve by quicken loans for a mortgage but i want to implement the BRRR in nj so i need to know how i can use the 203k loan to do so and which banks to go to and how to do the process in a way ill have no risk in making a huge mistake.
@Account Closed, congrats on getting your pre-approval. Now all you have to do is find (preferably) a 4-plex that you can do up while you're living there, that will cost you no more than 70% (all-in) of its ARV appraisal, and whose Rents will generate positive cash flow even after you refi into a higher mortgage amount. Then - you're free to do it all again at your next primary!
If you don't mind moving every year or two, seems like a no-brainer way to wealth!
Your chief concern is to get your purchase & rehab costs to LESS than 70% of ARV appraisal.
75% at a pinch. Otherwise, you can kiss the BRRRR strategy goodbye. All the best...
@Brent Coombs can you give me an example of the arv of 70%?
Find out what sold comps go for in the area. Multiply that by 70% (eg. $250k ARV x 70% = $175k). Therefore, your maximum Offer would be no more than $175k, LESS your rehab and holding costs!
ie. You would need to have a fairly accurate assessment of how much you would need to spend on it to bring it up to retail After-Repair-Value (which you would then subtract from $175k). Cheers...
Just out of curiosity, why Quicken Loans? Are they willing to lend on non-turn-key property? Were their terms any good? Maybe they're offering loans that might be more friendly to investors now, but in my limited experience refinancing, their loans were always among the most expensive. If you are indeed trying to get started with BRRR, why not work with local bank that might be your go to for the financing and refinancing (and of course, repeating).
hello @Ro Maga i was just seeing if i were able to get preapprove i havent seen there terms or such i will be visiting local banks to see rates and terms, can you give me any advice on what to look for?
Ha! That was a good guess on my part. The point is: there WILL be properties sold there, this month, for no more than $150k! (You can't tell me that there aren't any boarded up homes that won't change hands). Every one of THOSE homes will be a BRRRR candidate!
So yes - that CAN work in NJ. How do you think Flippers* and Wholesalers* succeed? My 2c...
* BRRRR strategists need to have the same mindset when putting in their/your lowball Offers.