Infinite ROI. Thats your goal
I have bought and sold hundreds of properties and I have represented well over 1000 clients in my real estate agent and real estate investor career. The question I am asked a lot is what is a good ROI. My answer simply. INFINITE. If you do it correctly and buy right you can use OPM to buy every property. I typically use hard money or private money to purchase the property at below market value then rehab to increase the value. Then have the property refinanced through a conventional lender. Generally under the perfect scenario I can then pay off the hard money lender and in some cases even pull out cash at the closing. Its harder these days to cash out due to the stricter lender guidelines but as long as the property will appraise you should at least be able to pay off the HM loan and essentially buy the property with zero money down. This is easier then it sounds because as we all know the hurdles are finding the good deals, know what you are doing with the rehab, knowing the ARV, managing the entire process, having good hard money and conventional lenders that you have built a relationship with and so on .... I throw in this because this business is hard but the rewards are fantastic if you stick with it and work hard and work smart their is no limit on how big you can grow.
Comments (1)
Hey Alex! I just started following you, because based on other posts, you seem to have a wealth of knowledge. I have one question about this post. The part where you said
"Then have the property refinanced through a conventional lender." I'm having a hard time understanding how to do this and why. Is this so you can pay back the loan without having to wait for the home to sell? What would the timeline look like? Buy, Rehab, Appraise, Refinance, Pay Lender, Sell Home?
If I buy a property at 50k and borrow a total of 130k for purchase and reno, with an ARV of say 250k, does that mean I can get the home appraised for hopefully 250k then be able to refinance the equity to pay the lender? And then how would the pulling out additional funds at closing work? If you sell the home for a profit, wouldn't you be getting the profits at closing anyway?
Sorry for all the questions. I am very new and just trying to piece everything together. Thanks for any help you can provide!
Jamal Momon, over 7 years ago