Situational 1st deal options!?

Question

Hey everyone, couple questions I have starting out looking to buy my 1st few flips/Brrrrs.

I have a little over 100k in equity id like to pull to invest from my primary residence, make roughly 60-70k self employed for last 3 years, with very little debt other than my mortgage and a slowly rising credit score 650-700 ish over the last year really stared moving up.

My question is who should I talk to to get a loan on investment? Should I refinance or Heloc the equity in my primary to buy a flip or start the brrrr process (which is the goal brrrrr with str and ltr whatever makes sense at the time)? I Also have access to hard money, which I may need if I can't get a loan and access any liquid funds to get started, and I have a few other avenues/lines of credit where I could generate 20k cash/credit if need be without begging friends and family haha.

Any help is appreciated greatly, thanks all!

Karl McGarvey · Answer

If it were me I would Househack a BRRR-able property. Get into it for very low money down 3.5-5% depending on the loan product. Live in flip it for 12 months and then rent it out on the backside. In 12 months move to another one and do it again! 12 months may be a little aggressive depending on your saving habits and self employment but there are people all over the country absolutely killing it with this strategy.

Joshua Messinger · Answer

Hey @John Thompson!

I would recommend exactly what @Karl McGarvey had! House hacking is one of the best ways for anyone to get started in real estate and really understand what will be required to go into a deal.

Hope this helps and if you ever need anything don't hesitate to reach out!

-

Josh

Ryan Deasy · Answer

helocs are generally easier to obtain and less costly than going through an entire refinance and closing process. you would be able to use it as you please long after this deal. for example, you could use it for this deal and then pay it off and do it again. futhermore, since it is on you primary, you will be able to get a better loan to value. do not quote me exactly, but a cash out refi you can probably do 75% LTV and a heloc maybe you can get into the 80s.

once you go to refinance your investment property, you will still need to qualify even though you rehabbed it and already own it. that does not guarantee you or really make it easier to qualify on the back end. the lender i work with is not a conventional lender and would be able to look past alot of the things that conventional lenders will get hung up on (self employment status, etc). happy to share more or quote your deal!

John Thompson · Answer

@Karl McGarvey as simple as that sounds I appreciate your help LOL I will do just that

John Thompson · Answer

@Ryan Deasy ok thanks, what would be the benefit of a heloc over cash out refinance would you think in my situation? Also with that being said, this would be my first deal, once it's bought and rehabbed with any money from wherever, is it easier to get or obtainable to get a 30 year mortgage once I have control over it and equity? That's the part I'm little confused over, who will finance it after rehab when I want to get cash out and do it again? And with my income is that possible in a lenders eyes once rehab is complete and there's solid equity in it?

John Thompson · Answer

@Karl McGarvey who would I talk to about any of those options? I appreciate the input

Ryan Deasy · Answer

@John Thompson

i would use a HELOC and hard money. fund the down payment and closing costs with heloc.. get the rehab 100% paid for with the hard money and refinance and do it all over again!

Karl McGarvey · Answer

Private money or a hard money lender? Commercial products ideally look at the property and not the borrower but the reality is your personal finances are probably going to be looked at in some way. DSCR loans also dont use interest but remember that for the convenience of those types of products theyre going to require much more money down.

John Thompson · Answer

@Karl McGarvey I could definitely agree, unfortunately in this scenario, I'm married with 2 younger children and that while attainable, is kinda hard having to relocate with a family of 4 every year or so on... I'm thinking maybe just running flips until I can build the capital to hold on to properties paid for in cash, which seems still far out in essence. Is there a loan product that is attainable as an investment property even if my income only shows 60-70k annually? Or who should I speak with about obtaining such a loan on a strictly investment property?

Situational 1st deal options!?

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