First Primary Residence House Hack/BRRRR?

[Rafael Perez]

Hey everyone I have finally been pre-approved to purchase a primary residence which I will be house hacking. I just recently have been looking at a handful or potential properties with my agent, but was also thinking about looking at off-market deals. I figured that if I can purchase a discounted off-market deal with hard money, increase its value, then refinance it through conventional financing with lets say 85% LTV (enough to pay back the HML), I can have instant equity that I can tap into later.What do you guys think?

If I do take this route, what ways can I market to find off-market? I was thinking connecting with wholesalers and cold calling. I also have $30,000 saved up, so I can potentially even do something creative like seller financing.

Any and all advice is greatly appreciated, thanks!

[Satyam Mistry]

Congrats on saving up $30k that is a great accomplishment. I would say that a BRRRR is a great way to get into a property at any point as long as the property can support the refinance. Remember even if you have $5-10k left into the deal that is not a bad thing as it is still less than if you had done the traditional 20-25% down payment. Generally the rule is you want to purchase the property at 70% ARV minus rehab costs which has become very difficult to find in this market. Doing some off market marketing and cold calling is a good way to hunt for deals and I would suggest that you try this as it has the greatest likelihood of bring a BRRRR type of deal for you. Just don't get discouraged as it may take some time. A HML is certainly an option, but just make sure the deal can support the expense of a HML and remember these types of loans are short term loans usually for 3-6 months. You should start shopping lenders and getting approvals for who you would plan to refinance the property with after stabilizing it. Another option you may consider is applying for an FHA or first home buyer loan as this is also your first primary home purchase. You may qualify for a very low downpayment such as 5% or less. This is considered house hacking and you would not need to refinance in this case since you would already have very low cash in the property and great terms for interest rate and amortization over 30 years.