Starting out is frustrating, and BRRR questions

[Beau B. Bray]

So I've been listening to podcasts, reading books, following the forums, etc for over a year now.  I'm in the process of saving money, while practicing analyzing properties, etc.

I was analyzing properties here in Virginia, and recently found what I think is a great deal. It was a 2 bed 1 bath SFH, 980 sq feet, on half an acre for $45k. During my research I found out it was a HUD foreclosure. It would rent for about $800/month. Also, all the comparable homes in the area sell for $120k+.

I started trying to get a pre approval for a loan on it, but so far the banks and credit unions I've gone to only offer a 15 year, 25% down loan for investment properties.  My preferred lender has a 100k minimum for mortgages.  

I was really trying to find a lower or no money down type loan since I don't have $11k saved yet, but it seems like it's just not available for investment properties.  According to the banks, this wouldn't qualify as a second home since it's too close to my current residence, and it wouldn't be owner occupied.  I'm in contact with another bank right now, but at this point I'm not very hopeful.  

Some may think I'm being too honest with the banks, but I've always figured that honesty is the best policy, and I wouldn't want to be accused of fraud, etc later on.  

My plan was to finance this with whatever I could qualify for, fix it up, rent it, and then continue with the BRRRR strategy to fund more properties.

My question with the BRRRR strategy is how can you refi for 30 if all that is available is 15 year loans (at least in my experience so far)? Also, once you refi for a larger amount, won't that eat up all your cash flow? I could see it making sense with a 30 year, but at 15 the monthly payments would be much higher.

Am I just missing something?

Thanks everyone,

Beau

[Larry Turowski]

@Beau B. Bray I love that there are frustrations because that is what keeps or pushes most people out of the business.  Be the one to overcome those frustrations and find a way to profit.

If the house is truly worth a lot more than $45K, consider a hard money loan.  You can search the term here to learn more about it.  These are people who lend money based on the asset, not on your credit worthiness.  You could get a hard money loan (it'll be costly, so there has to be enough margin for it to make sense), fix the place up, hold it for a seasoning period (the amount of time before a lender will allow you to refinance).  Generally this will be six months or a year, but there are some out there who have no seasoning period requirement, and then refinance.

For instance, maybe you can get a HML for $60 for purchase and rehab. Do the rehab, rent it out, make the payments, and after 6 month refinance what is now a $120K property at a reasonable rate. 70% loan to value refinance would be $84K. That would give you enough to pay off the HML and put some in your pocket.

Now, all that said, I'm skeptical about the $120K valuation.  Be sure you don't make any crazy assumptions.