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Updated over 2 years ago on .

User Stats

46
Posts
22
Votes
Joe Minteer
  • Rental Property Investor
  • Mechanicsburg, PA
22
Votes |
46
Posts

Looking for some financial guidance on my first BRRR with an HML

Joe Minteer
  • Rental Property Investor
  • Mechanicsburg, PA
Posted

Some info first. This isn't my first rodeo, I have bought and sold SFH via the traditional route: use my VA or pay 20% and get a home. So I do have cash to purchase this home, but my CFO (wife) has tossed a wrench into our first BRRR by stipulating I can't pay entirely in cash. So I have a contract to settle by 10/30 and need to work with other "creative" options. I have excellent credit, over $120k in cash on hand, I'm working on increasing my HELOC to $150k and both of us work and make good salaries.

So, I basically got the cart before the horse and need to scramble to find some financing.  You get used to being pampered by a realtor in helping you get financing, etc, so this is my first jump into using a creative option by 10/30.

The property under contract has a price of $73,500 and around $7,500 in upgrades due to roof issues and various other minor problems, which is why this isn't available for conventional financing. Updated kitchen and all new appliances, hot water heater and hvac make it a good deal for it's 1,800 sq ft size. Estimated ARV is north of $105k, but should be higher if I put some better upgrades into it. I'm planning on putting this as a Section 8, which in the area has a monthly rental around $1,200 - $1,400 for a 4 bedroom. I have local people helping, with rehab contractors, housing authority contacts, and local real estate agents, so this is not a total remote deal.

So, my question is how to proceed with a purchase using some type of hard money loan. I've followed BP over time and was planning on using cash, then use our LLC to lend a mortgage on the property, per a post by @Andrew Postal, but my wife's insistence on not using cash has make me switch gears. After taking to some lenders on some of their products, I'm confused on what's a good strategy if I'm going to use a hard money loan, rent for 1-3 months, then look to refinance out so I can lather, rinse and repeat.

Though I know cash is king, using leveraged financing can help me with building velocity in attaining more homes in a quicker amount of time.  I figured if I can land this home, wrap up some financing and get it rented, I can turn around and grab another home in a month or two, and again, lather, rinse and repeat since I won't be depleting my entire cash.

So, here's my first post and dilemma, and as always, any help would be great.  
I've learned so much from all of you and thanks for your time.