Very interested in investing, but a bit hesitant.
Hello everyone, pleasure to be a part of this community. Seems like there's a lot of valuable information and people on this forum. I'm currently very interested in investing in MFH's. I'm 22, live in NJ, currently a student, and have around $50k saved up. I've been researching for only a week and trying to choose which investment strategy would be best. BRRRR caught my eye, but the only part I don't really understand is the refinancing part. I get that refinancing would provide cash for your next property, but won't refinancing the property after 6-12 months result in a higher mortgage for the initial property etc...? Also the BRRRR strategy might seem more appropriate to someone who has a full time job, why would the bank give me a loan if I'm a student. As I said I'm rather new to this so I apologize for the noob questions, but any insight would be appreciated. Thanks!
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- Residential Real Estate Investor
- Kansas City, MO
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The point about refinancing is to do one of either two things:
1) Pull out the money you invested in the property.
2) Refinance out the higher interest private loan you used to purchase and rehab the property.
We use a private loan to buy the property and do the work (usually 8-9% interest only) and then refinance out with a bank loan (usually at about 5.5%). We try to be all into the property for 75% of its value so we can pull out all or at least the vast majority of the money we invested.
As far as getting a loan as a student, it could be tough. I would talk to a mortgage broker or lender about it. They may lend to you if you can get someone to cosign the loan, like a parent, who has income.