BRRRR with seller financing

[John Armando]

Hi All,

I've identified a property in my area that has been vacant for a number of years (previous owner passed away) and is currently owned free and clear by inheritance, based upon my research + local RE attorney. I am working to connect with the current owner to scope out the property and hope to use the BRRRR approach.

My question is, for the initial financing, I'm hoping to stay as liquid as possible to ensure sufficient cash on hand for the rehab. We have sufficient cash on hand + a HELOC on primary to probably buy with cash (depending on negotiated purchase price), but would then have to get creative for rehabbing, we also don't want to blow our safety net. Based on others experience (knowing cash is king), what are the pros and cons for each initial financing option and do you know of a resource that outlines some of these considerations?

As far as I can tell we have a few options for the initial purchase:

- conventional mortgage

- cash (cash, HELOC, 401k (definitely don't want to touch this, and/or other investments)

- HM/PM (could possibly work with some experienced partners to open up this line)

- seller financing

Estimated numbers:

ARV = ~$310k

Rehab: TBD, is a 1335 sq ft home, in a prime neighborhood, been vacant but exterior looks solid (once we tour the property with our GC, this will help us put hard numbers to the rehab)

Target Purchase: ~$110k and would be willing to go to $150k, such that we could at a minimum have ~$65k in rehab costs built in and still be under 70%ARV for the cash-out Refi. If we have to keep10-15k in the property I'd be ok with that.

Rental Rate: $1300-1600 per month

I'm very interested in going the Seller Financing route so would be interested to hear others thoughts on this approach with a BRRRR.

Kind regards!