All Forum Posts by: Michael Vasquez

Nevermind. I found the answer after talking to a few portfolio lenders.

Is it possible to purchase a distressed 2-4 unit property as an owner occupied dwelling through conventional or FHA lending and then get a cash-out refinance loan within 12 months after the property has been updated and leased in Texas?

I've been told by multiple lenders that in Texas, you can only do a cash out refi on SFR. If that's the case, then the house hack BRRRR strategy won't work in Texas for 2-4 unit properties.

Brent,

What can I say, I'm an aggressive investor. You won't know what you can get until you ask for it. I'm not expecting all my cash back, but getting at least 50-70% of it in 6-9 months and the rest within 2-3 years isn't too much to ask for. I'm buying distressed properties that I remodel, lease and manage myself. 

This type of investing isn't what got us in strife 9 years ago. It was speculative investing, no documentation, stated income and fake loans that did. 

I never said it was the lender's job to make it easy and I'm not choosing a, "hyped" market. The market here is not the same as it was 9 years ago for many reasons. I do this full time as a Broker and Investor. I was here when the market crashed in 2008 and definitely learned from those mistakes and know what to look for. Part of which is why I won't touch SFR as an investment in Austin nor will I do a SFR flip.

Research, diligence, bargains and positive cash flow is what I'm doing. I'm only looking for other ways to get creative instead of tying up all of my money on one or two projects. Right now I'm buying one distressed multi-family unit a month. I can't do that the conventional way.  

Stephanie, 

Thank you, but I'm looking at 2-4 units, not single family. I'm ok with 6 months seasoning and yes I do have a lot of moving parts. I'm getting closer to figuring out which lender and which system will work best for me. 

Brent,

"Well below market" for me is what I should say. I'm conservative on my ARV estimates. The Austin market is EXTREMELY competitive and there are very few 2-4 unit deals that make sense for a BRRRR. There are zero all in for less than 75% of ARV. You're lucky to find a fixer upper for 75% ARV not including fix up costs right now. When something does come up for that number, it easily gets 5+ investors bidding it up.

The play in Austin is long term buy and hold. Home values have increased way too much to make financial sense and there are a lot of newbies getting into the game. I personally know a lot of seasoned home flippers that have gotten out of that business altogether and now are rehabbing homes instead for the new investors. They make more money over charging and have less stress.

Bradley,

I'll message you shortly. 

I understand that all the loans will be recourse and am ok with that. I still have not been able to find a lender to do a cash out refinance at 80% of appraisal with a 30 yr loan. Plenty will do 70-75% or 15, 20 & 25 yr terms. I literally only found one that will work at the 80% and 30 yr, but he won't go south of Downtown Austin. That will work for some of my deals, but not the ones I have now. 

Can you send me a few that you personally know of that can do this? 

Thank you for all the responses. 

Chris & Russell, 

I've already spoken to over 20 lenders and brokers. It's the exact terms I'm looking for that is the problem. I can get almost what I need, but then the lender wants a recourse note which my partners don't want to do. The properties are bought well below market and will continue to appreciate in value here in Austin, so I think we may have to go that route.

Shaun,

Texas Equity (A)(6) doesn't apply to investment property. You can still do a cash out refinance on investment properties in Texas.

Aaron,

Thank you for the contact. I messaged Kim and she is not able to cash out refinance on LLC owned properties.

Brent,

We wouldn't be cash flow negative, but there is a $200+ difference in net profits from a 25-30 yr loan. We'd like to keep that extra income in our pockets and at the same time get back as much cash as possible to use for another deal. We have plenty of money and typically pay cash for our projects. Now we are trying to leverage our cash so that we can pick up more properties. Austin is a VERY aggressive market and there is a lot of competition here and good deals are very hard to find.   

Krystal,

Can you please send me your lender's contact information. Thank you

I see a lot of people talking about the BRRRR strategy and being able to do a cash out refinance after 6 months, but I can't find a lender that can do it sooner than 12 months. I've tried at least a dozen local banks and portfolio lenders. The terms I've been given have been between 15, 20 or 25 year amortization which won't work on the cash flow side for the BRRRR system. I only found one that will do it, but only at 90% of purchase cost which defeats the purpose of this strategy all together. Plus the interest rates are only going to go up at this point, so waiting a whole year will cost at least a 1/2 to 3/4 points more than now and I'd have to continue to pay a higher interest rate to the HML.

For all the people who have actually used this strategy, can you please message me your lender's contact info. I know not all lenders will work in all markets, but it's worth a shot. I'm investing in the Austin area now.  

Thank you in advance!

Hello Helen,

The average one bedroom in the Austin area is well over $900 a month and is getting closer to $1300 right now. Especially in the areas you're looking for. There is also very few studio apartments available and when they do come up, they go quickly.

I help people relocate to the Austin area and a lot of my clients are in the tech industry as well. My services are free since we get paid a fee from the apartment complexes. Your rent stays the same if you use a Realtor or not. We just make it easier since we know the city. 

Feel free to email or call me anytime if you need any assistance in finding a place. 

I've taken courses at Austin Institute of Real Estate, Real Estate Express and Champions. Real Estate Express is the cheapest and easiest to do. AIRE is the most expensive. Champions is right in the middle. 

If you REALLY want to get the full experience and get a good learning experience, go to the classes. You'll meet a lot of beginners and veterans, plus you'll be able to ask the instructors as many questions as you want. You'll also be able to talk to different brokerage companies and ask them questions so you can decide who you want to go with. 

My personal favorite is Champions in Round Rock. Hope this helps!    

Thanks for all the responses everyone!