All Forum Posts by: David Hendry

@Natalie Kolodij I agree completely. Most of the lenders that offer loans on unseasoned properties are around 6-9%

@Drew Bonner I agree. If I appraised my first two properties now, I would be able to get the full amount. Unfortunately that wont change where Im at now. Roy N put it best there is a myriad of costs involved with this.

HELLO ALL,

I know I am not a vocal member on BP Community. However, I havnt missed a Podcast. I jumped into my first rental 3 years ago. Im up to 4 now. I cant tell you how many times Ive heard Brandon say he uses the " BRRRR" method, I know I added another R. Here is why this method is not working for me. It doesn't account for closing cost, time, and rehab fees. Not to mention to get a loan you can only get 75% of ARV.

So lets first address time. It takes at least 6mos for your property to " season" so you can get a refinanced loan on it, for my first 2 it  took a year. This is an extremely slow process. Im not complaining but at this rate, Im not going to reach my number till im 85. Hearty laugh.

For my first property, I took a HELOC loan on my primary residence. Now after 4 properties heres where im at. The first I purchased cash $47k I cash out refied at 75% of ARV of 56k, giving me $42k. Loss of 5k. Im ok with that because its cash flowing $1000 a month, minus mortgage and ins 600. So -5k. Second property I bought for 70k then 23k in repairs. It cash flows $1150 but is work 120k now. However when I Refi I got 75% of 80k or 56,000. So -14k, add in repairs $-27k. The last 2 properties have not been seasoned yet and I bought cash with the remainder of the HELOC $67k and 70k respectively.

Now I have a maxed out HELOC, 2 properties with 30yr mortgages and 2 under the HELOC. I have 6 mos seasoning on one that I cant yet get a loan on. The other will not be seasoned for 5 months.

So you can see how this can easily add up.

My agenda of this post is to not point a finger or even complain but to make BP newbies like myself aware. Hey, there are costs to loans, you can only get 75% back out, and this takes time...

Fortunately, Im a medical professional. I have some disposable income, but Im having a hard time seeing a light to the end of the tunnel.

THANKS @steve Vaughan

Thanks for your responses Steve and Steve. Charlie in answer to your question, I purchased the property for 49,000. I owe 42,000 and its worth 53,000. Im asking 35,000 for refinance.

I recently purchased my first rental in June. I used the BRRR method as I found on BP. I got a great deal paying cash by taking out a Home Equitly Line of Credit on my current home. Now im looking at refinancing the rental home and paying off the HELC. Ive done all the paperwork for the mortgage on the rental and find the closeing cost are $4000. I cant see this as a good investment strategy as I've now paid for closing costs on the original purchase, and now am looking at $4000 to get a mortgage on the home. I plan to shop around as I don't feel this is a good deal. I would like to get a mortgage on the house as the HELC is a fluctuating line of credit at prime +1 and would prefer a 30 year mortgage. Is there any advice for a newbie, I don't think Ive made a bad investment with my current cashflow, but refinancing this home would wipe out all my prfits for the 3/4 of the year.

Thanks in advance,

David