All Forum Posts by: Eric Kovacevich

Hey Laurie, I live in the Milwaukee market and have to say this is probably not the best strategy right now. BRRRRing was very popular here for the last few years but the faucet has recently turned off. Not saying it isn't possible or won't come back when things go back to normal, it will just be very tough for two big reasons.

1) Cashout refinancing an investment property right now is not possible. I know this as I've spoke to lots of lenders and can't find any that are willing to do this on my property. You will most likely not be able to recoup your funds which defeats the point of a BRRRR. I could be wrong, but I would very seriously talk to lenders about your exit strategy before you pulled the trigger.

2) Labor is expensive and debt is cheap right now. Experienced investors around here have recently stopped BRRRRing because the margin between them rehabbing a property and just buying a turn key are so close it is not worth the headache to manage a project. Contractors are hard to get a hold of because they are in high demand, and they get paid handsomely. Instead investors are choosing to take advantage of low interest rates, just buy and get it rented. Nothing fancy.

Definitely don't want to be a Debbie downer as well, but this is what I'm seeing! There is a big fascination right now with thinking some other market has the magic ticket to be more successful but I'm a big fan of making it work where you live. There are going to be some extreme costs with long distance and I'd be willing to bet Utah has some of it's own micromarkets:)

Thank you that does help with clarity.

What would being prequalified by the bank look like or say? Would it just be a letter stating that when the property is fixed up they will issue a loan upon appraisal and inspection? 

When I purchased my last duplex my pre qualification letter just stated something like "buyer can purchase property upto 170k" 

Would the bank be expecting me to have cash on hand for the amount of the 25% downpayment when refi'ing, or would they not be concerned about that as long as the property appraised 25% higher then what I owe my grandparents?

Hypothetically let's say the property is purchased at 200k put 10k in work and worse case the place only appraises at 240k. The difference between all in and appraisal is 30k but 25% of 240k is 60k. So I would need to come up with the remaining 30k as downpayment to get the loan moved to a bank. Is that correct thinking?

Hi all,

I'm a total newb to using outside money and was hoping I could get some advice from people who have gone down this road before.
I have done 2 deals so far, both duplexes with conventional loans and I'm looking to amp it up a bit. I recently met an older investor who is looking to sell off a quadplex and I'd love to purchase it. Problem is he isn't keen on seller financing and I don't have the money for a down payment.

Note: we haven't discussed price yet so this is all theoretical. I do know from county records what he purchased the property for and it was in 2012 for approx 90k under current market value. It could potentially sell on market for 220-280 depending on inside conditions.
My conclusion to solve the problem is borrowing cash from my grandparents who own a large dairy farm. They also borrowed money to my parents to start their business 30 years ago. The property is no slouch, but it could be improved. The plan would be perform improvements and refi out, returning my grandparents money in 9-12 months.

How would you go about structuring a deal with this scenario? I would like them to be rewarded well for giving me the opportunity, what is a fair rate for something like this? Or should I be offering points? Should something like this be structured through an accountant?
I guess I understand the theory behind this concept, but I'm not sure how to physically put the plan into action. 

Thanks