All Forum Posts by: Edit B.

I'm interested in this as well, and have been looking to set something up for a few months now. I'm glad there is some interest in this thread. I'm not sure why it was canceled or delayed - Can we work on setting a place & date?

@Ramy Barsoum

@Rob Bivens

@Rob Bivens@Jarrett McAllister

@Mark Pedroza

@Sergey Tkachev

@Matt Hoenicke

@Al Williamson

@Derek Daun

@Thanh Nguyen

@Gordon Cuffe

@Yia Her

Andrew Postell thanks for your input on both topics!

Hi guys, I'm going to be working on my second deal using a HELOC + cash to buy in full cash. Would I still qualify for Delayed Financing Exemption? The reason I'm asking is because my strategy is BRRR and I want to make sure I will have access to the cash fairly quickly after the purchase. Specifically I'm unclear on the guideline below and what is meant by "no financing was obtained";

DFE Guidelines:

1.) Cash out refinances where the subject property was purchased within 6 months (measured from HUD-1 date to the disbursement date of the new mortgage) when no financing was obtained for the purchase are allowed under the following parameters:  

@Andrew Postell sorry tags don't seem to be working consistently for me. 

@Andrew Postell

I still don't think its being fully understood here. I'm probably not doing the best job of explaining this. 

Lets forget about the BRRR.

Lets say you have a property purchased at $200K and its financed with a conventional loan (20% down or something like it). A few years later you owe $100K(as an example) on it and are paying interest as usual. At this point however you happen to have saved $100K as well. So.. you can either keep this $100K and invest it as you wish(real estate of course) or you can throw it at the house, pay off your mortgage. Assuming you pay the mortgage- at this point you have no mortgage, are paying $0 in interest, BUT you also short of $100K to invest. So you go and get a HELOC for lets say 75% of property value. Now assuming your property has appraised a bit you will most likely be pulling in around 75K to 100K on your HELOC. So what do you have now? You're paying $0 in interest, no mortgage, better cashflow, AND you still have your $100K available to use whenever you like. At this point you can continue with your BRRR as usual, and anytime you have the cash begin to pay off some of the other properties to benefit in the same way..

@Sam Amir you have good energy man. A few comments on what you had to say;

- HELOCs have a fluctuating rate, unless you lock yourself to a constant rate, which is generally more expensive, and even then usually 5 years or so. BUT i'm not really worried about the HELOC rate because the strategy is to BUY... Refinance. Which means my cash will come back after the first deal and back into my HELOC. At which point ill be ready for the next one. To sum the process up here and hopefully reduce the confusion for others:

0.) Pay off the current duplex(property 1) with my own cash 

1.) Get 80% HELOC on duplex(remember I'm not saying to fund immediately, only when you have another property, simply have HELOC ready)

2.) Find deal, purchase another property(property 2) in full cash

3.) Finance the property 2 conventionally (get 80% of your cash back)

4.) Pay off your HELOC(no interest while you are searching for next deal)

5.) Find another deal, buy another property .. etc

--All in between here, using cash flow pay as much as you can on conventional loan properties and get new HELOCs on them to do double the work.

-Good cash flow is important, but both cases paying and not paying off will generate good cash flow, with my method I am essentially saving on the interest, because I am only paying on interest for the amount of time the HELOC is used and not in between.

 @Kyle McCorkel The point here is that by paying the property off in cash and taking out a HELOC, I do not pay interest. You do not pay interest on a HELOC until the point that you fund or use the cash. This leaves times in between(while repairing/renovating, finding new deals etc..) that you are not paying interest. On a mortgage you are always paying interest.

@Andrew Postell see if my process above makes sense to answer some of your questions, and let me know what you think 

Hi guys, I'm interested continuing my investing using the BRRR strategy. I currently have a duplex that was financed at 4.75%. I've recently began accumulating some substantial amount of cash and I'd like to get some pros and cons to paying off mortgages and using an equity line credit vs not paying off the mortgage, paying interest on the cash at all times.

Scenario-1:  Paying off mortgage entirely, and following up by a 75% to 80% equity line of credit

Pros: Not paying interest, stability, significantly increased cash flow. Aside from those, using a HELOC you will then have 80% of equity at hand in cash available to invest on your next property. Paying interest only when you are using the cash(mostly a pro in my opinion)

Cons: You will have slightly less cash available(20% less). You are taking on further risk if market declines- this was risk that the bank was previously owning

Scenario-2: Not paying off mortgage entirely, paying interest, and using your available cash for a new property.

Pros: You will have 20% more available cash than Scenario-1, thereby more purchasing power for your next deal. You will be taking on less risk in case of a downturn as your property will be mostly financed. 

Cons: You are essentially paying interest at all times. Not only when you are using the money. That has a significant impact on cash flow(low cash flow). Less financial stability as cash flow will need to be higher for there to be profit.

Please share any thoughts

Hi everyone, I'm in the Sacramento area working on a few wholesaling deals but like many others my long term strategy is buy and hold. Im interested in BRRR but am having trouble seeing how that would work well in a sellers market. My problem with BRRR is that it relies on leveraging a lenders cash- which to me means using MLS as a source for buying, as wholesaling deals are usually done in cash and often need repairs which makes lending hard anyways. With that being said, the chances of getting offers accepted on decent property at 70% of retail are pretty slim in a sellers market. This leads me to believe the strategy works better in buyers markets. Any thoughts on this?

@Tim Kunz, thanks for your feedback- I'll keep you posted if I organize anything myself but for now I'll check out the Roseville Meetup. 

This is pretty old but if you guys are still interested in having a meetup please comment on my intro post