Investor · Charlotte, NC · Member since 2017 · 321 posts · 157 votes
Hey. I'm fairly new in the real estate investing. I purchased an investment turnkey duplex property for 95k cash and it appraised for 117k. It's currently being rented. I just learned about the BRRRR technique and I want too move forward with the property I have. I'm looking too refinance the property and start the BRRRR techs. Any suggestion on how to refinance ? & moving forward what type of properties I should look for ? thanks
Northern, CA · Member since 2014 · 674 posts · 444 votes
9y
@Isiah Ferguson tough to do a BRRRR with a turnkey, basically impossible because you are paying near or at retail. There is a ton of info here on BP regarding BP, but the basics are to be be all in with the buy and rehab at ~75% ARV, put a renter in, wait your 6 months if refinancing traditionally (there are other options that cost more) and refinance all your purchase and rehab money out.
I can't imagine the BRRRR working without the first R, which is Rehab, to force some value into the property. That isn't to say it's impossible, just extremely hard to find someone to sell you a property for 70% of value that is in perfect condition.
Investor · Charlotte, NC · Member since 2017 · 321 posts · 157 votes
9y
exactly right @Jeff Dulla. My business is so premature I don't have the 2 previous W2's to prove my income. So the bank I didn't find is while too loan me based off of my assets
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
9y
Then that isn't a terrible rate if it is fixed. You can get a 5/1 ARM and 7/1 ARM probably a bit lower. So I guess it depends on what loan program they are quoting you.
Real Estate Investor · Sacramento, CA · Member since 2016 · 96 posts · 26 votes
9y
I would still say great start. Even though you bought at little above 80% ARV, your in it all cash and so you can at least pull some money a lot of your money out. Your cash flow maybe less than what you projected however, the brrrr you want to apply will allow you to move onto other opportunities. Good luck on that one. Shop around - maybe be creative and find some private investor who may just want to finance and collect monthly checks from you.
Real Estate Investor · Fuquay Varina, NC · Member since 2016 · 13 posts · 6 votes
9y
Jason Lazarski
My credit score went way up when I got cards with 30k limits and pay use them for everything and then pay in full 2x a month. Went well above 800 after this.
Real Estate Investor · Las Vegas, NV · Member since 2016 · 22 posts · 0 votes
9y
Is there any way of removing negative items on your credit report before they expire off. I had some short sales and foreclosure during 2006 crash but everything else on my credit was great.
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
9y
You will have a hard, nearly impossible time ever removing something like that from your credit. You can get letters from creditors stating that the lates/derogatory is inaccurate - some credit card companies or utility companies may produce what you need to remove their lates that report, but I have never seen a lender give you a deletion letter for a shortsale or foreclosure.
It sounds like some of the rates you're being quoted are more in the "hard money" ballpark, as 8% is extremely high for today's market. I do some residential "buy and hold" financing on both single-family and multi-family properties, and the terms/ballpark rates that I see and do look like the following:
- 5 year balloon/20 year amortization (as long as appraisal states the useful life is at least that long)
- rates are in the 4.5% range.
The one thing the 30 year amortization gives you is the lower payment, thus giving you stronger cash flow. If that's on the conventional mortgage side of the bank, there is a strong probability that loan is going to show on your personal credit report (limiting the amount of properties that you're going to be able to buy...usually that number is four). If you go the commercial loan route, the negative is the shorter am period and the fact that the interest rate is only locked for 5 years on the balloon. The positive to that is that you can borrow in your entity name, and the loans don't show up on your personal credit (you would need to show each property and loan associated with that property on your personal financial statement though, which a commercial banker would require annually). I have some investment properties that are buy and hold properties for long-term cash flow, and I've always gone the route of the commercial side...even though the rate is only fixed for the balloon period. It's nice to get established with one bank/banker that you can pick up the phone and call/email, plus they hold those loans in-house...so they service them for as long as you keep the loan there.
Hope this explains the process a bit without leaving too many questions unanswered.
Philadelphia, PA · Member since 2014 · 129 posts · 29 votes
9y
If I'm not mistaken being that this is a Duplex creating income, The refinance would vary in that the bank's appraiser should do the income approach making this property significantly higher. Make sure that the appraiser also did the income approach if he is worth his salt.
Rental Property Investor · Alpharetta, Georgia (GA) · Member since 2016 · 145 posts · 68 votes
9y
I think you need to wait until you have more equity in the property. Channel all your cashflow back into the property that you can afford. Of course you have to keep enough for reserve capex.
A little patience and look for the next deal at 70% LTV.
Investor · Malden, MA · Member since 2015 · 66 posts · 14 votes
9y
@Isiah Ferguson , I just completed my BRRRR and I am also paying a 8%interest which is high, but I did mine with a private lender because I could not find a bank that would refi my house without 6 month seasoning period, and I could not wait, I wanted my money out to put toward another property, and my credit was also not that great. If you could wait the 6 months, great , and you should get a better rate with the credit you have. My other BRRRR that I have will wait for the 6 months unless I can find a bank that would do it sooner.