All Forum Posts by: Ash Hegde

Hey Cameron, ideally with a BRRRR you want your all in costs to be 70-75% of the after repair value. When you go to refinance, you can leave 25% equity, pull out the 75% in cash, and pay off your hard money loan. The "down payment" is really the appreciation you forced by buying a good deal and rehabbing it, and you end up with a rental property with zero out of pocket. The numbers don't always work out like that, but that would be the best case.

For a conventional refinance you would need to own it for 12 months, but with DSCR you can refinance at 3-6 months.

The next step would be DSCR loans. They are going to have higher fees and rates than conventional, but that's part of the cost of growing your portfolio. Qualifying will be based on the rents of the property vs the mortgage and will not include your personal income. If your current mortgage broker doesn't have this product, many lenders here on BP do.

Thanks for the shout @Ray Hage. @Lina Castano I'd be happy to help you.

I missed another important question - are you cash flowing or losing money each month? If you are cash flowing, even though the interest feels bad, the better answer would be not to pay it off. Leverage really helps with real estate investing growth and returns. 

That being said, if it keeps you up at night to pay that interest rate and you have the cash, it's your call if you want to pay it off. Just be aware that it will slow your growth over the long term if you choose not to carry debt. 

What are your goals with real estate investing? Generally speaking, if you are looking to grow your portfolio, you do not want to pay the loan down early. It would be better to save the cash for a down payment on another property. 

I'm guessing that's a quote on a bank statement loan, which unfortunately is about right. 

Your liquid assets do give you some creative options, like subject to. You have enough cash to bridge the equity gap and take over someone else's lower fixed rate. 

You also have the ability to buy a fixer for cash and refinance it later on, hopefully getting all the cash out, though it's hard to know what rates will be in the future.

Those scenarios assume you don't need the 500k cash for something else. 

That's good news, it should allow you to count your employment income since you can document it. You'd still need to qualify but that's one of the bigger obstacles for self-employed people. 

My question was for the new one - if you would be interested in buying a SFH instead of a multi, living in a room and renting out the others. That would allow you to use 5% down, though you couldn't count the rental income for DTI purposes, and of course you'd have roommates - which may not be ideal for your personal situation. On the plus side, it gets you another property with a low down payment and rental income.

@Scott Trench only FHA keeps the low down payment option when buying multifamily. 15% for a duplex and 25% for 3-4 units is accurate for conventional.

This is tough without the FHA option, at some point you're going to need higher capital amounts to buy rentals. Any interest in renting out rooms in the new home and using a 5% conventional?

As Andrew said, speaking with a lender getting pre-approved is probably the best way to get more firm numbers and options so you can do further analysis and go shopping. 

Are you able to document two years of self-employed income with tax returns? The reason I ask - there are bank statement loans and other non-QM products that will allow you to get a mortgage without that documentation, but the FHA 3.5% house hack is not one of them. You would likely be looking at 20-25% down.