Some Issues with Real Estate

[Waleed Asad]

Hi so I'm a beginner investor and have ran into some roadblocks.

(1) Me and a neighbor who is also a contractor are wanting to invest 50% each in real estate, not to exceed $30K each. So total 60K.

(2) My credit score is only 550, 610 if I pay off 3K of my debt, but I'm hearing it will be difficult getting a loan unless my score is above 720. My credit history is only 2 years old.

(3) In this case, I've thought about the BRRR method, where we pay for a property in cash, fix it up and refinance to put a down payment on another house. However, this would require me to quit my job which I don't want to do yet.

Maybe in 2 years when I'm making enough to be able to quit my job, and enough in savings to invest in a new home with partner.

What is the best thing I can do with our money of $60K?

Sidenote: let's say you buy a fixer upper for $40K, fix it up for $8K, now the house is worth $80K.

Also what are the advantages of BRRR vs Traditional?

You refinance it and take out a loan to purchase a second home. 70% of 80K is $56,000. So you buy another fixer upper for 50k, fix it for 6K, and refinance again to buy a new home.

This is how BRRR works, right? Am I describing it correctly?

[Whitney Hutten]

@Waleed Asad Welcome to real estate! To get an overview of the BRRRR method, pick up David Greene's book BRRRR right here on BP. Then you can start filling in the gaps from there like (guides below):

Lending strategies for BRRRRs

How to avoid refinance issues

Here is also a guide on how DTI impacts your ability to get a loan (might help you strategize to raise your score). PM me if you have more Q's.