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Updated over 5 years ago,

Account Closed
  • Investor
  • Phoenix
14
Votes |
52
Posts

Specific Question about Financing a Deal

Account Closed
  • Investor
  • Phoenix
Posted

This question is specific to my situation and would like some input please:

Have completed two deals in the last 10 years, one live in flip and the other is a BRRRR that I'm living in right now and plan to rent out. The Live-in BRRRR is almost complete with its renovation and I plan to rent it out in the next couple of months. I used a VA Rehab loan to get the bulk of the work completed by a contractor and am finishing up the rest of the work myself.

The next step I foresee is to either house hack or purchase a SFR rental using conventional financing, whichever deal makes most sense. What I'm unsure about is the best way to go about financing the next purchase?

Current situation:

The Live-in BRRRR was purchase using a VA Rehab loan @ 3.25%, zero down, approximately $60k in equity today 06/2019, which I think is about 17% of the likely appraised value.

Potential options for financing the next deal:

1. Refinance the current Live-in BRRRR into a conventional 17% down at a higher interest rate + PMI until 20% equity is achieved. This will free up the VA loan to use again and wrap the Rehab costs into the purchase price but will for sure increase the BRRRR property monthly mortgage payment.

2. Keep the Live-in BRRRR loan as is but borrow against the $60k equity in the form of a HELOC for help finance other deals.

3. Keep the Live-in BRRRR loan as is and use my cash reserves (approximately 13k) to purchase a property and Live-in BRRRR it. I suppose the $13k can either be used for a <20% conventional purchase or hard/private loan + refi. I mentioned <20% because $13k will not provide enough of a down payment to achieve 20% down in the Phoenix/East Valley area.

4. Some other option I don’t see.

Again, the question is: what is my best option for financing my next deal with my current situation?

Feel free to reach out with other details you feel are essential in making a decision, thanks!