All Forum Posts by: M T Naughton
M T Naughton has started 7 posts and replied 16 times.
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
Originally posted by @Travis Fairbairn:
Originally posted by @Jesse Byrer:
@M T Naughton in my opinion buying cash is the wrong way to do the BRRRR Strategy. The best way to do this is work backwards. When you find a property you like.
Step 1 - Figure out how much it’s with all “fixed up”.
Step 2 - Get an accurate idea of how much it will cost to fix it up
Step 3 - Take 75% of the “fixed up” value minus the “cost to fix up”. That is the number you’ll want to offer.
If the offer is accepted you’ll want a loan for 100% of or 75% of the future value.
What this allows you to do, and the main reason you want a loan vs. paying cash. Is once the rehab work is done you no longer have to wait 6 months (there will be no waiting period), but you’ll also get a lower interest rate on your final loan because you’ll be now being doing a rate and term refinance instead of a cash-out refinance. It’s different and rates are higher on a c/o refi.
I'm a lender and a BRRRR investor and 100% believe this is the best way to quickly build a real estate portfolio.
Good luck!!!
@Jesse Byrer I'm confused by what you are saying here. I'm very intrigued. My understanding is that the reason people pay cash/get private/hard money for the BRRRR project is because a traditional lender will not lend on a property at the distress level that a lot of people are looking for in a BRRRR. Is this true? Or are you saying to find a less distressed property that a lender will still lend on?
Travis, i am aware of the proper way to do the BRRRR. the reason i paid cash for this deal is the cost was so low, and the potential was so great, i didnt want to pass on it. so i paid cash thinking finding a mortgage of $35-40k on a house valued at $70k w renters, would be fairly easy. I will continue to search, but i didnt expect it to be as difficult as it has been. I think the first 3 deals are the hardest, to build a relationship w a lender, than the next 10 will be. Back to work
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
Originally posted by @Scott Wolf:
@M T Naughton where is the property, and how many lenders have you contacted?
Small town Illinois - Central Illinois. I have contacted 5 different lenders. The best i was able to secure is 80% of my purchase and rehab price. that is better than nothing, but was hoping for a bit more.
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
i'm going to be in $13k for the home, and $22k for rehab.
ARV = $65-70k
the rent will be $800. i'm really just looking to get my money back in a refi. If it appraises for $70k and i get a 50% mortgage on that, i would be very happy. I'm just having a hard time finding someone to do that.
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
thanks Jon. i'm just having a hard time finding a lender. i got to keep looking though. Something BP never talks about is, the first 2-3 BRRRR deals are probably alot harder to do than the next 10. Trying to find a lending partner has been a bit of a struggle...
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
thank you for your replies. but it doesnt fix my issue. i bought the house cash because it was $13000. i had the cash, so i bought it before it was gone. I still dont know how to get a mortgage on it, other than waiting the 6 months. i want my money back faster than that. i guess that is the lesson learned. But i couldnt not buy it at that price. So should i take the 80% of money invested or should i wait the 6 months?
Post: Refinancing with the BRRRR strategy
- Posts 16
- Votes 3
I bought a house cash. I will be paying for rehab out of pocket. Before I begin rehab, I want to have a lender in place to refi before beginning rehab. Now I am shopping lenders, and I am having a hard time finding a lender who will give me a mortgage against the appraised value. The closest I got is 80% of purchase price and rehab costs. They want to see my money in... Has anyone had this issue? Can someone provide me some advice on how to get his refi done? Am I putting cart before the horse, and just wait to shop for mortgages after rehab is done? Will they still want to just give me 80% of purchase price and rehab costs? Why would I need a mortgage if I own the property outright? Please advise me on how to proceed. I'm at a loss right now... Any advice would be appreciated. thank you