BRRRR in Akron Ohio

[Mavely Pazmino]

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

[Brendan Taylor]

Quote from @Mavely Pazmino:

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

Lots to consider here but most important is finding the right team of people to help with this. 

To answer the loan minimum question most HMLs have a $100k minimum but there can be some exceptions. 

[Jake Baker]

@Mavely Pazmino

I agree with @Brendan Taylor that your team is everything here. 

It is very easy to go over budget on rehab. Be sure to create a clear scope of work with your contractor and agree on strict timelines to you don't pay more in holding costs. 

The biggest wild card here is appraisal. You're depending on one person's opinion of the value of your property. I lightly stage my BRRRRs before the appraiser goes in. 

[Erik Estrada]

Quote from @Mavely Pazmino:

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

You will find that most nationwide HMLs have a minimum loan amount of $100k for both purchase and rehab. Also many HMls will reduce the LTV to 75% of the pp and 100% of the rehab if this is your first time flipping.

I would recommend saving up more or working with another experienced investor to make sure you have 6 months reserves, 25% down + Closing. In this market, appraisals have been coming in pretty low (relative to the market), but in general. 

[Nick Bednarczyk]

Quote from @Mavely Pazmino:

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

Over the years, I've worked with many investor loans. Fix and Flip, DSCR, construction, foreign national, etc. Ultimately, section 8 housing can be a great way to build your rental units due to guaranteed income. So i would check out the local government for section 8 payments in your area. At the end of the day, I would look at all the options you have for accessing the funding and liquidity that youll need. I hope this helps.

[Logan Lambert]

Quote from @Mavely Pazmino:

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

 Hey Mavely,

Ohio is a great market to invest in, even if you are out of thet state. I have a lot of borrowers who invest there. There are some outlets that you can utilize the heloc for down payment. I would connect with a solid agent also that knows the area so you can ensure that you have the correct ARV going into the deal.

The lowest amount is 100k for us if your using a heloc, but I do have an outlet that you can utilize but need funds in a bank account. I will direct message you.

[Regina Blake]

Hi, please always consult lenders regarding your questions that is best choice. Ohio is definitely a good place to invest in real estate. If you have any questions, please feel free to contact me. Thanks! 

[Mike Klarman]

Yes, so Ohio was hot for the last few years but now it has cooled some.  I had a few appraisals come back from Akron/Clv markets and had the appraiser comment that it is a "down market".

If you are targeting the 50k purchases with the 20k rehab and then hopping to refi out afterward you are taking a gamble because if you do not get the 100k value after the rehab you can get stuck in the project or be forced to take a mortgage with a terrible rate.

Keep your purchases 80k and up and try to make sure your project costs are over 100k on everything so you can be pretty confident that you'll get the 100k value afterward.

[Jack Schwartz]

Mavely, I typically steer clear of Hard Money Loans (HML) when it comes to BRRRR rehabs due to their steep interest rates, which range from 9% to 14%. Such rates could take a significant bite out of the profits. With that in mind, could you advise on the most straightforward and fastest method to refinance a BRRRR? I appreciate your help,

[Brendan Taylor]

Quote from @Jack Schwartz:

Mavely, I typically steer clear of Hard Money Loans (HML) when it comes to BRRRR rehabs due to their steep interest rates, which range from 9% to 14%. Such rates could take a significant bite out of the profits. With that in mind, could you advise on the most straightforward and fastest method to refinance a BRRRR? I appreciate your help,

How to refinance a BRRR? You contact a local bank. If they won't touch it for whatever reason you go DSCR. Obviously local bank is preferred.

And HML are sometimes a necessary thing for new investors who do not have cash or rich connections. I would try to avoid it on your very first deal but plan your exit right with multiple options. Line up a bank to refi before you buy it. If you can't refi it know that you can just sell it.

HML can let someone get in the game when they otherwise couldn't. Obviously if you have unlimited cash then sure, don't do it but for 90% of people it is the cost of doing business.

[Jack Schwartz]

Thanks Brendan, 

[Ryan Arth]

Quote from @Mavely Pazmino:

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

You answered your own question here. Every dollar into this project is borrowed at various interest rates. There is a very real chance that your rehabbed section 8 property will not appraise for enough to cash out refi all funds invested. You would likely use the proceeds to pay off the HML, leaving you with a new mortgage (which you paid to get) and a HELOC payment (and possibly a residual balance with the HML).

[Brittany Minocchi]

Depends on the cost of the property, how much rehab it needs and what it will be worth after rehab...on a refi, you're usually looking at 75% max. If you look at the amount you'd need for acquisition and rehab from the HML and it's more than that 75% of ARV, that means you're coming out of pocket for the refinance. Don't forget to account for closing costs here as well.

[Robin Simon]

Quote from @Mavely Pazmino:

Interested in thoughts/experiences with the initial purchase and the refi on a BRRRR in Akron. I'm an OOS investor. We're interested in cash flow and recycling our money. (Our first BRRRR but not our first rental). Interested in section 8 tenants.

We will be using a HELOC as down payment, however what can we expect when buying a distressed property in B/C neighborhoods in Akron for a BRRRR?

We want to use a hard money lender and use HELOC for 20% down payment…
should I be worried that once I buy and rehab I wont get a high enough ARV to refinance in order to payback my HELOC and HML?

What's the lowest hard money Lenders lend with SFR/Duplex properties in Akron?

Hi - sharing an article I wrote and published here on BiggerPockets last year on this exact topic - options for BRRRR financing - hope it helps!

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

[Adam Laurenzo]

Do you have a solid contractor? I've heard those are devilishly hard to find around Akron.