Columbus, OH · Member since 2015 · 19 posts · 5 votes
I was told the following, could someone confirm or deny this is accurate?
If I pay cash for a home, rehab, rent, and go to refinance Fannie/Freddy guidelines will require me to keep 20% equity/my own cash in the deal regardless of new appraised value.
If I buy a home with hard money/private money with a note in place, rehab, rent, and go to refinance I can put 80% LTV in place based on the new appraisal. So potentially could have none of my own capital in the deal if I buy right/add enough value.
SO basically, they were claiming there's an advantage having a first mortgage in place when completing a BRRR because it allows me to leave no skin in the game, where as if I buy and renovate with cash I'll be forced to leave 20% or so in the deal.
Do you own the property in the same state as you live? If so, try a local community bank and ask if they offer portfolio loans. Many times local portfolio lenders offer loans with out any value seasoning restrictions. You may be able to cash out refinance based on fair market value and get all of your original down payment funds back out of the project to use towards next one.