All Forum Posts by: Ash Hegde

Hey Tyler - with no rehab experience, a hard money loan will need 15-20% down of the purchase price (not after-repair value) to get into a distressed property that you can flip or BRRRR. With a few rehabs under your belt, that can drop to 10%, and at around 10 rehabs of experience there are 0% down programs.

You've gotten some good information already here. The conventional will need more documentation, personal income qualification, and be in your personal name. The DSCR is simpler and in a company name. DSCR loans generally have higher rates and fees than conventional though.

Sorry for the frustrating experience! Their income verification slip up could have been a disaster. I'm really glad you got a raise just in time to allow you to qualify and hope the closing goes well tomorrow.   

This is a tough question and you are right, after increased taxes, rent and child care cost increases, the numbers will be much closer than they look at first glance. How many more years will you need full time child care? This seems like a situation that may be a bit difficult for the first couple of years but with a lot of potential to take off from there. 

Welcome to the forums! BRRRR is actually doable with less cash up front than putting 20% down on a rent ready investment property. It's more work though.
The idea would be to force equity by getting a good distressed deal and fixing it up. You could start with a hard money loan to help with the purchase and rehab costs, then refinance once everything is complete. 

That being said, keep saving while you learn and decide which direction you want to go in. The more financial strength you have, the better. Extra cash can help you cover any mistakes/oversights, they are bound to happen in the first deal(s) as you gain experience.  

It will need to be in livable condition. For a distressed property typically you would get a hard money loan for the purchase and rehab then refinance into a DSCR loan once the rehab is done and you place a tenant.

Wholesaling or subject to are probably your best bets with 10k savings and self-employment income. Even hard money loans will need 15-20% of purchase price for someone without experience, and any purchase will have closing costs that will eat up your savings pretty quickly. Getting a money partner may also be an option if you are open to it. Otherwise, keep learning, working hard, and saving until you are in a better position. 

Be careful with this strategy on a BRRRR, high credit card utilization can lower your credit score and make the refinance more difficult (and expensive).

I'll echo what Aaron said, if you are trying to grow your portfolio, do the 5% down and use the extra cash for reserves and for your next property. 

Ask your lender what it would cost to do the refi, you would lose the mortgage insurance by having 20% equity but the fees may not be worth it. 

For the HELOC, you would not have to withdraw and pay interest in order to get to 20% equity, they would just give you a lower line of credit. With your numbers, at 80% LTV, you could get loans up to $128k. Subtract the $120k of your primary mortgage, and you would be eligible for an $8k HELOC. Many banks will pay the closing costs for a HELOC provided you keep it open for 2-3 years, but it's up to you if the paperwork is worth it for that sized credit line.