Hard Money VS HELOC VS Both for BRRRR

[Wes Evans]

Please help me think through what I might be missing and any suggestions of other creative ideas.

Purchasing a BRRRR property in price range of $50K-100K with $20-50K of rehab needed. (70K-150K ALL IN)

Currently have:

- HELOC against Primary for 60K @ 4.125% and another 40K liquid for the investment. = $100K

- interest free credit cards for 21 months with 0 interest = $75K

My thought process was to buy with HELOC and cash and rehab with 0% interest credit cards.

To think long term and create a process that will allow me to run a BRRRR repeatedly, should I go the route of HELOC at 4.125% and rehab with credit cards, OR use $75,000 of hard money at 7.125% (lending home or RCM) and fund the remaining amount with HELOC and cash?

Any advantages to going the hard money route or just causing myself a headache and costing money? I figured eventually I will be going the hard money or private money route but should I start from beginning doing this?

[Jay Hinrichs]

U max out credit cards you may suffer a big decline in your fico and there fore pay much higher interest on your refi.. CAUTION

[Wes Evans]

@Jay Hinrichs Thanks for the heads up. If I have 75K of open credit via credit cards (cards with interest) and 75K more that I used for rehabs (0%). With 50% usage on the credit cards, would that have a large impact on my rates? Assuming my personal debt to credit is extremely good (780 credit score, 50K savings, high income with low expenses) 

[Jay Hinrichs]

Originally posted by @Wes Evans:

@Jay Hinrichs Thanks for the heads up. If I have 75K of open credit via credit cards (cards with interest) and 75K more that I used for rehabs (0%). With 50% usage on the credit cards, would that have a large impact on my rates? Assuming my personal debt to credit is extremely good (780 credit score, 50K savings, high income with low expenses) 

 Talk to a lender first your 780 could drop bc of the outstanding and available cc debt. 

[Jason Hirko]

Originally posted by @Wes Evans:

@Jay Hinrichs Thanks for the heads up. If I have 75K of open credit via credit cards (cards with interest) and 75K more that I used for rehabs (0%). With 50% usage on the credit cards, would that have a large impact on my rates? Assuming my personal debt to credit is extremely good (780 credit score, 50K savings, high income with low expenses) 

 It depends on how much other credit history you have. The highest mid FICO scores I usually see for people with high utilization and no late pays or derogatory accounts is 670-680. If you have a 700 now with 10% utilization, and take that up to 60%, you could very well see a 50+ point drop.