All Forum Posts by: An Nguyen

If you have $45k in a HYSA. I would just start talking to a Hard money lender IMO. More than likely your lender is also highly incentivized in you taking a HELOC. Which can sway that recommendation.

At the very least for your first 2 or 3. I would hold off on a LOC. After a couple deals under belt, then take out a massive line of credit and grow fast with the all-in volume game.

If you're in Nashville like me. Check out the REIN meetups and FB group. You'll get tons of resources and contacts

- Nashville Wholesaler/Investor 

You have very strong equity in your current home, but you don't want to burn it all and make your house worth less with more leverage. My concern in your post is this - "For the last few days". Is that all the time you have been doing research on this? If so, do not take action yet, you don't know enough. This is a good place to start, but why do you want another property? Do you have experience with renovation or landlording or mini-flips? Your capital is available to do it, but that doesn't mean it will work out well. It's not a great time to BRRRR so if buying something more turnkey as a newer investor is safer if you see appreciation in the future and you plan to hold in a long-term strategy.

@Nicholas A.

happy to help - can you give us more info as @Jonathan Greene pointed out?  i've done several BRRRRs, including one that just 'failed,' so i sold it as an accidental flip, and here's the deal.  i am not going to sugarcoat it.

in no order:

-BRRRR is really, really tough overall right now. tougher than advertised. there is lots of competition for deals; good contractors are booked up; materials are expensive; and interest rates are high.

-you generally have to buy a severely distressed property at a steep discount. if your ARV is 200K, for example, and it needs a medium or greater rehab, you probably need to buy under 100K. 150K won't cut it, you'll lose money.

-you likely won't cash flow at all when you refinance, and you might even be negative. if you use a DSCR loan expect your closing costs to be 5-10K and your rate to be in the mid 7s to high 8s. new investors are ALWAYS surprised that there are closing costs. since a BRRRR involves a purchase AND a refinance, you'll 'close' twice and likely pay 10-15K just in closing costs.

-it's much harder to 'add bedrooms' than David Greene says in all the podcasts.  if you found a property where it's straightforward, great.  but it may not be.  you can't just call something a bedroom.  you have to look at your building code and talk to GCs who have done it.

-your refinance will be dependent on your appraisal, and appraisals are inconsistent.  the appraiser couldn't care less how much you spent on the rehab, or how shiny your countertops are.  they are going to go by COMPS, and if the comps are all over the place, they will round way, way down.

hope this helps

not trying to be negative, just realistic after doing 5 myself and 'messing up' the last one =)

 What was the reasoning for wanting to pay off the rental? Typically you want the debt with the property and putting that debt on your primary is generally a no-no unless its short term.

If I were you I'd pull out 70% equity from the rental property, go find another house under market value to fix up and force appreciation. 

Say your rental is worth 100k, pull out 70k, find a property for 40k, and put 20k into, and 10k into holding costs and extra buffer.

Refinance that rental at say 100k,at 70% LTV and get 70k back.

Now with the 70k you can either pay off the first rental again, pay off the additional amount you put on your primary residence or use that money to scale and buy more. Now these are arbitrary values but you get the point.

Hope this helps!