All Forum Posts by: Ethan Gidcumb

Hey Nicholas, using the BRRRR method you can use a private or hard money lender to fund the majority of the project. If you require funds for down payment and closing costs, you can find private lenders to cover the Gap. I would recommend finding these contacts through BiggerPockets. Some of the clients I have worked with found the most success here and although you also have options such as a Facebook group, other platforms that are not real estate-focused can raise the risk of scams. I hope this helps!

Hey Tom, I would like to piggyback off of what Shawn Mcenteer mentioned. A great investment property could be one that requires very low renovations, this way you could negotiate for a deal and it could be an easy flip into a buy and hold. Once you have a property that you can rent out, you could utilize long-term financing. If you can find financing through a conventional bank, you will save money on closing costs compared to a hard money lender. However, if you or the property doesn't qualify for long-term financing through a bank, you can utilize a DSCR loan through a hard money lender. I hope this helps and good luck in your investments!

Hey Courtney, 

One approach you could take is to plan for the worst-case scenario on any future BRRRRs (i.e. run conservative numbers, use the realistically highest interest rates, etc.). If your property still works as a BRRRR, then it's probably a good deal. I'm hearing information that rates are supposed to be cut next year as well, which will be good for the refinance portion of your project. However, nobody can pinpoint a specific rate for sure, so it'd be best to make sure you are completely confident in the risks you are taking. Hard money loans will likely reflect some sort of change but will always be more expensive when comparing them to long-term rates. So the best way to handle that portion of the BRRRR would be to have a well-thought-out and approved rehab plan for your build, so the refinance is easier.
I hope this helps and you've had success since you posted this 3 months ago!

Hey Lisa! A lender should be able to structure the loan to reflect at least a 1.00 DSCR. It's possible that due to your desired LTV and the property's costs (such as taxes, insurance, and management), your lender couldn't find an option for you. But, that creates an opportunity for you guys to brainstorm how to make the deal work. I want to hope that your lender didn't mean to be sarcastic, but, maybe their products aren't a good fit for your investing preference. I hope this helps! 

Hey Oscarr! A "buy box" is what you consider when determining if a deal matches your goals. For instance, if I didn't care about anything about a property except that it must cashflow $500/month, and it does cashflow $500/month, then it works for my "buy box". Buy boxes can be different for everybody.

I hope this helps!

Hey Juan, when working with borrowers I usually look for somebody with experience (atleast 3 projects done), approved permits for the build, and at least 15% of the project financed by the borrower so they have some skin in the game (plus enough cash to close and make at least 6 months of interest-only payments). Hopefully this helps your expectations for what your lender might look for when doing a project!

Hey @Ly Nguyen, congratulations on taking steps towards your next investment! How are you looking to finance your project? Usually, borrowers are looking for private lenders for properties that require rehab. In these situations, I would confirm with your lender what LTV they can lend up to, to ensure that your $60k of reserves is enough for the down payment and closing costs.

I hope this helps drive some thought on the financing part.

Hey @Dushyanth Hegde!

One thing I didn't see mentioned in this thread is the difference in a lenders loan-to-value for a long-term rented property versus short-term. Some lenders will offer a lower LTV for a DSCR cash-out due to the volatility that can be experienced in short-term rented properties. I hope this helps!

Hey Evan! I would reach out to your lender about that to clear up any confusion. In my own business, we would not allow properties to be leased to yourself or your relatives on a long-term loan. It might be different for your lender.

I hope this helps!

Hey Mike!

I can understand how you feel about the credit check. During any preliminary stage, I ask for a client's credit score and wait to do an actual credit check until we can make a deal happen. I understand what their agent is talking about but I ultimately side with you on this one. 

I hope this helps!