Following the brrrr strategy

[David Kors]

Hello everyone, I was learning about brrrr strategy that many investors are using nowadays by question is which kind of loan would be ideal to use for the first property? And if I find a property below the market value for example like many house flippers use 70 percent rule and if I find a property that I buy using 70 percent rule would I have to make a down payment? And when I choose to refinance the property what happens to 30 percent of the equity that's sitting there?

[Yingchun Li]

We use 70% rule minus rehab/fixing cost and actually, we prefer hard money. We are in Houston market and we prefer to use the local hard money as the appraisal comes out better!!! We heard bad stories of people using the hard money company from another city for better interest or maybe lower points but the appraisal comes out lower.

Because they watch the deal ( if it's not a deal they won't lend you any money), and control the rehab money by inspection. (they inspect the house every ten days and send out the rehab money). They do that is for control the rehab process and quality to the final ARV.

Then after the rehab is done, start the refi immediately. You can start all paper even on the closing day. It also depends on your financial status, when we refi our deal, we need to show the lease contract to the lender. So have a tenant there asap is the key even you can give 1 month free then write if off from your tax. 

Normally refi to conventional loan is 75%. Then you need to pay lender's fee, appraisal again. Make sure you have the survey. Better use LLC to purchase even the interest rate is higher but it protects your assets!!!

We learn so much from the first REFI and all those real costs which most people won't tell you until you see the numbers!!! Talk to the lender, hard money company, and banks. Compare them. 

Good luck!!!