BRRRR using Sheriff Sale purchases and HELOC

[Mike K.]

I'm financially stable with good income, low debt, and good credit score. I'm in my upper 50s and would like to retire in 8-10 years with $3000 in passive income from RE investments. I have about $250k available through a HELOC. Seems to be a shortage of positive cash flow properties available on the local MLS here in central Ohio. Thinking about purchasing foreclosed properties at auction using HELOC funds for the purchase and renovation costs, then refinancing into a 80% LTV conventional loan to pay back HELOC, and renting property long term. Is anyone using this method? How many properties do you purchase in a year? Are there any risk factors to this approach, beyond typical BRRRR?

[AJ Exner]

Mike,

Sounds pretty close, but I maybe add a tweak. With that kind of acquisition strategy, it might benefit to utilized a delayed purchase because most lenders struggle to underwrite deals in the span it takes for the auction to close.

If you do it delayed, you can stay mostly liquid, then follow up the purchase with essentially a cash out refinance of the purchase price with rehab funds being put into an escrow account as well.
Would be happy to explain further, but my clients that operate that way tend to prefer that method to keep getting their cash tied up too much.