All Forum Posts by: Fran Pratt

@Fran Pratt

no, of course not... I just wanted to get my initial reactions to your post out. if every penny you're spending is from a HELOC you're under additional pressure as you have to beat the interest rate you're paying on everything. if you had said you had a bunch of cash that would be different.

my advice is always to stay local, pick a market, and learn it. go to all the REIA meetings, network with all of the other investors, tour dozens of properties, reach out to 50 contractors, talk to agents and lenders and property managers.

here's what i posted in another thread re: BRRRR.

can i find a great deal where i can significantly increase the ARV via the rehab?

do i have a contractor that is both reliable and available to start reasonably after i close?

am i confident in the ARV increase i am going to get after i finish the rehab?

can i afford holding costs - interest payments on debt + utilities + insurance + anything else you need to pay for while the rehab is going and the property is vacant?

do i have my financing lined up for the refinance?

what happens if interest rates go up again?

can i achieve my target monthly rent?

i've done a few BRRRRs. they're tough.  happy to answer any add'l questions you have.

@Fran Pratt

First off, congrats on the motivation. That's a step in the right direction.

Second, the size and speed of your investment depends on how 'fat' that HELOC is and at what terms.

It can be done and I just helped someone do it. My buddy has a son that wanted in on the commercial investment game. I had a small apt that I was willing to sponsor him into. He used his HELOC, which he had at 10% (CRAZY!!!) as the down payment. He had to adjust the down payment above 30% in order for his DTI to work. Long story short, he got a 7 unit for ZERO out of pocket and it cash flows. As time goes on, he will cash flow more and can trade up and make a few hundred Ks extra to pit into something bigger. Or he can just hold long term and keep growing the cash flow.

The numbers look like this: 7 units, all 1/1. Price was 900K. Monthly tents were $7903 and growing. 6/7 tenants are government subsidized with 10% built in rent increases. I was cash flowing over $50k/yr from that property, which I purchased just under 2 years ago. Now I am 1031x the funds. My buddy's son just got into commercial REI and can grow bigger and faster than if he used it to get into SFRs.

It can be done. It does take some networking. It takes a good Lender as well. Keep searching, keep underwriting, dont give up.

Best of luck.

I keep getting tons of daily unwanted solicitation calls from Lenders who tell me they got my number from Rent to Retirement. If you have an intro phone call with them, just know they will share your info. Which I find pretty disappointing and spammy, and did not understand that would happen before initiating the call. If anyone knows how to undo this and get off these lenders' radar, I'd love to know how.