All Forum Posts by: Darren Budahn

Hans Thurau You bring up a valid point in that one should definitely have a lender lined up to refinance the property otherwise the strategy won't work and you may be stuck with a high interest loan a lot longer than you'd like. And I don't think this strategy is necessarily only for those with little capital. It's more of a way for any investor to keep recycling his money instead of having to pop down 25% down payments over and over again. Obviously the main factor is finding a great deal with some equity.

This whole story sounds implausible. Requiring 50k in earnest money should send up a hundred red flags. Not to mention there is no way 2 people in the real estate business are going to sell you a property with an ARV of 350k for 180k and it only needs 5k in repairs. If those numbers are correct, tell your wholesaler I'll pay him 250k instead of your 180k.

No problem. 

@Kyle Spinale

The 50k is cash to do whatever you want with.  You are just pocketing the equity you have in the house which is simply the difference between what the house is worth and how much debt you have on the property.  

@Tyler Jahnke

The refinanced mortgage rate will be based on what the current market rates are.  So it could be higher or lower--just depends.

You can do whatever you want with the 50k the bank just gave you.

The 50k cash the bank gives you is NOT a loan.  It is cash to do whatever you want with.

@Kyle Spinale

Say you have a house that you bought for $150k.  Now after say 10 years you owe $100k on the house and it's current market value has gone up to $200k.  At this point, you could refinance the house because you have enough equity.  For instance, it's common for banks to lend 75% of the value of the house.  Therefore, a bank would now lend you 75% of $200k which is $150k.  Since you only owe $100k on the initial mortgage, the bank writes you a check for $50k. 

I think you need to go over what the BRRRR strategy entails again. If you do a cash out refinance, you will get 75% of the appraisal value. If your numbers are correct, this should get you most or all of your money back.

I'd keep the 30 year fixed

@Frank Profeta

You can look up some threads here on BP for more information. But basically if you are able to buy at a significant discount it may be an option for you. IF you buy all cash, you are able to recoup all of the purchase price and closing costs (Not Rehab Expenses) with no seasoning as long as the property appraises at say 75% LTV. So if you buy all cash for 75k, get an appraisal for 100k, you can get all your cash back right away without having to wait 6 months. Now if you spend a ton on repairs you will have to wait to refinance to get that money back.

I'm not sure you are going to find those kind of terms anywhere. If you want no seasoning, i think you will need to go with a portfolio lender where terms are going to be more in the commercial realm. If you want 30 year fixed I think you are going to need to go with conventional financing and have to wait 6 months. Also maybe look into "delayed financing " if you are looking to get your money back as quickly as possible.