All Forum Posts by: Ash Hegde

If it's going to be long term in nature, a fixed rate home equity loan is less risky than a variable rate HELOC. That is the main difference between the two. Be aware that the payment for either one will be added to your monthly debts when applying for the mortgage on the investment property which could affect if you qualify or not.

What would be the long term goal with option A? Rehab while living in it and rent it out after a year or more of a live in flip to sell in a couple of years?

Option B is going to come with a higher down payment as an investment loan. 

Adding extra doors is always good, but if the single family is a rare and great deal you'll be able to force equity there. 

I don't have one for you, but good idea looking for additional referrals. The one your realtor recommends could be great, or not so great, so it's wise to talk to a few and find one you trust. 

What industry is your desk job in? Construction would be a great skill to have for flipping and BRRRR, that is a demanding schedule though.

Welcome, hope you do well down here! 

It's a good idea for a BRRRR if you can get the funds back and pay it off when you refinance. It's not as good if your refinance is not paying enough back and you are ending up with a long term balance on the credit line, since it is variable. It's harder to achieve the full payback these days so be diligent with your numbers.

Welcome! Sounds like you're off to a great start!

I haven't purchased a turn key property myself, but from my understanding:

The main pro is that you will be starting with instant cash flow, a rehabbed property with a tenant and property management in place. It's still important to do your homework on the company you buy from and the property itself. 

The main con is that you are paying full retail price for the property. When you buy a distressed property and rehab it yourself, you are forcing appreciation with the improvements. That step is already done and you are paying for that markup in a turn key situation. 

Quote from @Stephanie Cortez:

Quote from @Ash Hegde:

Does that mortgage payment include taxes and insurance? From the numbers your deal does not look bad. Your dad is asking you to do a flip, a completely different investing strategy. Neither one is right or wrong, but they are different and will depend on your goals and how comfortable you are with the rehab process. 

Yes, you can do both, depending on how much cash you have (or how much you have left on your HELOC line). For a first time flipper, you will need 15-20% of the purchase price of a property to get started. You do have to find very good discounted deals to make flipping work and it is a completely different skillset from buying a move in ready rental property.

 Yes it does include taxes and insurance. When you say 15 to 20%, you are suggesting I use a lender? My dad wants to invest money with me to buy a property with cash. Once purchased, he suggested pulling as much as I can against the home to finance repairs. He knows how to rehab homes but is also 71 years young. I want to learn as much as I can from him but also feeling he could be scared for me to take risks. If I find a fixer upper, he is suggesting outsourcing workers that need jobs to rebuild a potential home and paying a little more for things like electrical work.

If you have the cash for purchase and rehab then there would be no need for a lender. With the sequence he is suggesting, you will be using a lender to finance the repairs. A distressed property may not qualify for traditional financing due to its condition, so you may end up needing private/hard money at this step either way.

If he knows how to rehab that's going to be a huge benefit to making this work for you though! As Dustin mentioned above, with those rehab skills you can combine the flip and rental into a BRRRR. Purchase with cash (or hard money), rehab, rent, and refinance your original money back to you 

Does that mortgage payment include taxes and insurance? From the numbers your deal does not look bad. Your dad is asking you to do a flip, a completely different investing strategy. Neither one is right or wrong, but they are different and will depend on your goals and how comfortable you are with the rehab process. 

Yes, you can do both, depending on how much cash you have (or how much you have left on your HELOC line). For a first time flipper, you will need 15-20% of the purchase price of a property to get started. You do have to find very good discounted deals to make flipping work and it is a completely different skillset from buying a move in ready rental property.