Can I use the BRRRR method on a personal home?

Question

Hello, So as the title says I am thinking of buying a house for personal use and use the BRRRR minus one R at least for now. I am looking for a place for my girlfriend and I and found an amazing property for 40K when its estimated worth is over 120K.  it needs a new leach field but if i can bundle that all in to a loan and refinance after 6 months or a year it should give me enough to move on to the next property right?  Ideally from there I would use the full BRRRR method to build my portfolio.

If this all sounds reasonable then my follow up question is this. With little to no credit how can I get the property financed? I plan to talk to a couple banks on Wednesday to see if there is anything I can do there but my assumption is it wont work out especially since I cant afford a large down payment currently.  Given i plan on the first home being for personal use i cant imagine I will easily find someone wishing to invest. I'm just looking for any help I can get to push me in the right direction. Thanks!

Jaysen Medhurst · Answer

@Justin Bearce, look into a FHA 203 (k) loan. It allows you to borrow the purchase and renovation costs with only 3-5% down. There's red tape to deal with, but it can be a really good option.

Justin Bearce · Answer

This will be my first investment and I have a decent job but I have nowhere near that in savings. And wouldn't for quite some time.

Carlos Ptriawan · Answer

yes we call it living in the flip, you can use conventional loan. For rehab project just apply for unsecured loan.

Justin Bearce · Answer

The best I have is a father with good credit and low to no income and my girlfriend who has a similar credit score and about half my income.

Ryan Murdock · Answer

@Justin Bearce FHA 203k loan and a co-signer. Any chance you have a bankable friend or family member who would sign on the loan with you?

Justin Bearce · Answer

@Nick Calamia To do that would I start with contacting the real estate agent and ask for an intro? I am just not sure quite how to get in touch with the owner to make such an offer. What would be a reasonable rate or deal in that

@Jaron Walling it has a new roof and has no AC but I live in Maine so that's not terribly common anyway.  There is no mention of the furnace other than it has one with baseboard heating and a wood stove.  The house looks like its in very good condition but it is labeled as a "fixer Upper and needs a new leach field." I have not gone to look at it yet because I wanted to ensure I wasn't wasting their time. its entirely possible that there is more wrong with it, but there doesn't appear to be anything wrong with it visibly.

@Hannah Krebs I plan on going to the bank to talk to them no matter what because that is my ideal situation. Hard money is the only other option on here that i might have a shot at but being unfamiliar with the concept it terrifies me just a little. Thank you for your advice.

Jaron Walling · Answer

@Justin Bearce I was in the same boat brother but don't give up! You'll have to find something more expensive and keep your credit in check otherwise you're kinda stuck. What is the condition of the major mechanicals (furnace, AC, Roof)? These things will kill your loan and you get to waste some money in the process.

Nick Calamia · Answer

Justin, a powerful too I like using, and is especially useful in the situation where you are at since it will be your primary, is approach with owner financing. You may be able to get in with little or NO money down. However you might need to sweeten the deal for the homeowner if they aren't interested at first by giving them favorable interest rates. This shouldn't matter much since you plan on refinancing the property anyways once you have possession.

Hannah Krebs · Answer

@Justin Bearce to start off, I think that your plan is a solid way to get a good start. We did something similar with our first property. We needed a place to live and a project, so we bought a home that needed work. We lived there for a year and paid the mortgage, and made a solid profit when we left. So, it can be a great thing!

The second part of your question, financing, is a little trickier. Rehab loans would be in your wheelhouse as it sounds like conventional financing isn't possible, however these are trickier to acquire. Hard money may be an option, or borrowing from friends or family. Start with finding a good mortgage officer and seeing what they have to offer you! You never know until you ask. If none of those options work out, I'd say work on your credit and save as much as you can for a down payment until you're ready to rock. Talking to a good mortgage officer can give you a head start on preparing for future mortgage interests.  They usually have good ideas on how to raise your credit and get things squared away. All things considered, where there is a will there is a way.

Best of luck to you!

Justin Bearce · Answer

Also fr what I have seen it's in good condition just needs a leach field

Can I use the BRRRR method on a personal home?

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