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Updated over 9 years ago on . Most recent reply

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40
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2
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Daniel Elbe
  • Investor
  • Colorado Springs, CO
2
Votes |
40
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Live-in flip advice?

Daniel Elbe
  • Investor
  • Colorado Springs, CO
Posted

Hey gang, 

I'm looking for some feedback from investors who have gone the live-in flip route. I'm in the market to buy out in the Colorado Springs area, and figure if I'm going to buy, I'd rather buy something I can force appreciation through rehab rather than hope the market appreciates. I plan on living in the house for at least 2-3 years before I move, (most likely on military orders) so I don't think HML is a great option. Depending on the offer acceptance, I think I can walk in to the house about $110,000 under ARV. My wife and I plan on doing some of the work ourselves (flooring, tiling, painting) but larger items will definitely require contracted work, and more $$ invested. This will come in the form of moving walls, opening spaces up, and the sub tasks associated with it (demo, framing, rewiring electrical, dropping new lights, etc.) The smaller and more cosmetic things I can pay cash for, but the larger contracted items I would have to finance.

Does anyone have advice on the best ways to finance renovation for a live-in flip? Assuming my numbers for ARV are correct, I can most likely get about $25k in a HELOC (assuming they will loan on 75% of the ARV). I'm active duty military and assume that a VA loan will be my best option with low interest rates and 0% down, but I don't think there are any VA options for renovation. What kind of loan do you recommend I pursue? How do you recommend I finance the larger renovation projects?

Thanks!

Dan

Most Popular Reply

User Stats

268
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115
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Michael Woodward
  • Real Estate Investor
  • Greenback, TN
115
Votes |
268
Posts
Michael Woodward
  • Real Estate Investor
  • Greenback, TN
Replied

In my opinion, this is the very best way for someone new to this business to get started in real estate investing. I know people that got started this way and it's the way I got started as well.  

Advantages that come to mind are....

1) Securing funding for a primary residence is usually MUCH easier than for investments

2) You can move as slowly as you need to with the renovations.  

3) Profits are amplified by living in the project because you're saving all the money you would have to pay for other housing.

The one disadvantage that my wife would want me to point out is that you have to live with a house that's in constant change (mess).  She desperately wanted to "nest" but it just wasn't possible.

Regarding the financing..... I would go talk to three or four of your local banks and mortgage providers.  Larger banks could offer the financing you want but local banks and privately owned mortgage providers usually have more options and flexibility.

FIRST...... Do your due diligence and put together a really nice, professional presentation.  You need to understand the numbers and be able to convey them effectively.

Good luck!

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