Finishing first flip and looking for next need financing

[Phil Sirmarco]

Would like some advise on financing. I am finishing my first flip in NJ. I bought the house for 60k put 60k into rehab(all my own cash). The value after rehab is around 170k. I am looking for advise on how to move to multi family rentals. I would like to know the best road forward? Do/can I get a mrtg on the rehabbed house while it is for sale or do I try to get a mrtg on the multi family and use the rehabbed house as collateral? Looking for someone with some experience to give some advise.... thanks in advance for any help given

[Geordy Rostad]

Hi @Phil Sirmarco,

You cannot obtain a mortgage on a property that is for sale. The bank wants to make loans that will pay and perform for a while.

Is there any particular reason you are not trying to rent the property out and turn it into a BRRRR deal instead? It sounds to me like if you are $120k in and your new valuation is $170k, that's a 70% LTV and you'd still have 30% equity after pulling all of your money out. $120k @ 4.75% interest would be about $775/mo PITI. Could you rent it out for a reasonable amount more than that? If so, you would be crazy to sell it IMO.

All you need to do is get a 1 year lease signed and you can take that to the bank and use 75% of that income to qualify for the loan payment. 

If the rental numbers are better, you could even try to pull out $136k so you'd have an additional $16k in your pocket to seed your multifamily with and it would be tax free.