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Updated over 8 years ago on . Most recent reply
![Brandon Clark's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/506776/1621479970-avatar-brandon1488.jpg?twic=v1/output=image/cover=128x128&v=2)
strategy to get me in the rental game
Hey BP,
I initially wanted to start out flipping but now I really would like to take advantage of the brrr technique. My two issues were the down payment for a 80/20 commercial loan and also being able to move on to the next deal sooner than later. So instead of saying "I can't", I've decided to say "how can I". So below is what I would like to do in detail.
I would like to be all in after purchase/rehab for 80k or less. Which will create a maximum down payment of 18k(20%) plus other expenses.
I have about 20k available in LOC and Credit cards. (I may also be able to pull a HELOC on my primary home)
I will rent the property between $1200-1400, I will immediately get a LOC on the rental property to pay off my personal LOC and Credit cards. (The ARV is 130k-140k. So should be able to get 80% LTV at around 24k) I will make sure that my cash flow will cover all LOC expenses.
I will get more specifics on the terms of the LOC on the rental property soon.
At this point my Personal credit is free and now I can move on to the 2nd rental property and repeat the process. After 12mo I can do a cash out refi to pay off the LOC on the first rental property.
In my head this strategy seems like it could work for me and get me in the game. If you guys think that I am missing something please let me know.
Thanks in advance
-Brandon
Most Popular Reply
![Mike Hanneman's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/479724/1621478522-avatar-mikejhann.jpg?twic=v1/output=image/cover=128x128&v=2)
LOC on investment properties are doable but only a few big banks do them. You will have to find a local bank or credit union. Most of these banks will require seasoning to refi with cash out the minimum is 6 months maximum is a year. It is possible to find a bank that doesn't care but you will have to do some scoting.
20% down for an investment property would be a dream, most lenders want at least 25% down, some even 30%.
As for you rent is that what market rates are in the area you're looking at buying in? You need to check and double check to make sure you can get the amount you planned when you bought the place.
You need to go talk to lenders to get one lined up and to find out their terms and how long it will take them to refi for you. You'll want to hjave this lined up before you buy, plus yo'll want a pre-approval letter so when and if you find a place you want you can put in an offer imediatley!
Also most lenders, if not all won't let you use a credit card for a down payment or part of one. They want you to have you own skin in the game.