All Forum Posts by: Tanner Lewis

I HIGHLY SUGGEST NOT USING CREDIT CARDS FOR FLIPS. If you want to leverage for the purchase and reno of a deal, I suggest using either hard money or private money, especially if you want to refinance a deal and hold onto it as a BRRRR.

When people put reno on credit cards or credit lines, it increases their credit utilization rate, which decreases their credit score. It sounds great on the surface: use a 0% APR intro offer on a credit card and then pay it off when you sell/refinance the property. Unfortunately, I see a lot of borrowers come looking for a refinance with an 800 credit score before reno, and then after reno, it looks like a 580, forcing them to sell a deal for an ok margin when they would have been much better off with a BRRRR as intended. Using hard money and private money will not affect your credit score nearly as much.

Contact a conventional mortgage broker and determine what you will be eligible for. I would do a conventional/FHA househack strategy for your first deal, and then start to get into non-owneroccupied deals afterwards.

First start out looking for a good foundation of cash flow, and then you can start to make more appreciation plays as long as the cash flow supports it

If it sits vacant and you are paying a mortgage, insurance, and taxes on a deal, I agree it wouldn't make sense. But most investors are looking to rent out the property to cover at least these expenses and cash flow on top of this. Cash flow is not the only profit you will be taking on the deal: appreciation, depreciation, mortgage pay down, rent increases, etc. 

I would rehab it to what other sales/rentals in your market have. If you put more into it, you probably won't see much of a value add. If you plan to rent it out, the main thing is to make sure it is durable and can withstand tenant wear and tear. 

I would consider cash-out, refinancing the deal, and buying out your brother-in-law. Since it is vacant, this would probably work best with a conventional loan, and the proceeds would be used to pay for the reno + buyout. Once you finish the rehab and get a tenant in place, you can go ahead and refinance it again with a DSCR loan if the cash-out amount makes sense

DSCR loans are based on the projected income for a property (for an acquisition) or actual income (for refinances). A mid-term rental would be treated like an STR acquisition, and you would use AirDNA's projected income to qualify.

Anything 1-4 units will be primarily valued off of the sales comp approach, anything multifamily will be valued off of the income approach. So no, your deal will be comped with other deals in the area and will appraise for the same value. 

Quote from @Andrew Steffens:

+1 for @Michael Baum.  My preference is use AirDNA (premium) which include links to comps then double check their calendar/pricing.  Good luck!

Rabbu is also solid, but the standard for lenders is AirDNA. I would use the lower of the two for your projections, but they pretty much both pull from Airbnb and VRBO

Quote from @Calvin Matthews:

Quote from @Tanner Lewis:

There are not many LOC products available for investment properties. Are you looking for one because you are locked in at a low interest rate? If the property has been used as a rental property, it might be worth exploring refinancing with a DSCR loan.

Hello, thanks for your reply. Correct we bought our vacation home in October 2021 so our interest rate is under 3% and therefore "I don't think" (because I'm still new to this and am up for any smart option) a cash out refinance would be smart in our situation. I've heard of DSCR loans on the Bigger Pockets podcast so I need to re-listen to this option. Thanks again.

That is what I figured! You could explore moving into the property and taking out a HELOC. I am not a conventional lender, but I am sure that there is some seasoning involved in living in the property to take out a HELOC.