All Forum Posts by: Michael Peters

@Chris Courteau, I was born in Buffalo - love it there. Good luck with your investing! As for the refi - I am not sure in my situation. I am halfway through the BRRRR book, but I am under the impression that with my conventional 5% down load, a refi wouldn't make sense since I will have such a heavy loan amount early on. The forced equity we are hoping to add isn't even 50% of my original loan amount. This is why i was thinking the HELOC strategy could be a good one.

I may need to look into Refi some more, does it matter how much equity you have in the deal to Refi, Does anyone know if it would work in this case or not?

@Clark Kirkpatrick Thank you for your input. I haven't gotten any commitments, but there are credit unions and other small banks that advertise 90% in my area. We actually have a small credit union that advertises 100% LTV, but is more expensive and I would need to dig in whether it is worth it.

I don't think I can BRRRR this property because i will have a conventional loan with small money down. I will still owe $270k - $260k on the loan. I was under the impression I could not use that strategy if I have little equity in the home.

Hello BP Community!

I am 2 weeks from closing on our first property. We are purchasing it owner-occupied through conventional financing. As always, we believed we got a good deal. However, as we dug deeper, we are concerned about the tax implications if we pursue our original plan to flip as soon as we can. Our goal is to have 2 rentals by the end of 2020.

After researching and listening to some of the amazing BP podcasts, I had an Idea. I would love anyone's opinion whether the strategy below is doable and if it makes sense to expedite our investing.

Purchase Price: $285K (5% down, loan approx. $270k)

Rehab: $50k

ARV: $400k

Our goal is to use this property to build capital to get into rentals. I hate to wait the 2 years to be tax free on this sale, but understand we don't have great margins either. SO...

If our appraisal comes in around $400k as I hope. Could I then use a HELOC to turn our forced equity into capital and use that to purchase our first rental? With these numbers, I think I could pull out $90,000, (90% of ARV = $360,000. minus $270k,000 loan). In my head, if we were to profit $40k after our rehab costs I would be thrilled! Knowing that a lot of that will be eaten away by commission, closing, taxes, etc. Could I just pull it out as a HELOC and use that money instead? We could then stay in the home until the HELOC is paid down and we are past the 2 year window. I understand I will be paying for this money and it won't be straight profit, but it seems like a good plan to get the capital as soon as I can.

Does this make sense? Is this doable? Would love your advice! - Thank you.

Great Article by Justin, thanks all for sharing! I am under contract on our first flip and admittedly am worried about what I may be missing. We have done our fair share of research and did not want to get stuck in analysis paralysis so I am glad we are under way on our first deal, but it is nerve-wracking nonetheless and I am sure we are hit some learning speed bumps.

One question I am struggling with is how i should factor in holding costs (conventional loan + utilities, insurance, tax, etc.) If we are living in the house for a year? These expenses add up a ton in the deal analysis when you extend out a year. However, we would have at least some of these expenses elsewhere if we decided to stay in our rental during the flip. Further, aren't I paying towards the mortgage and thus creating a small bit of equity in these payments or does that not factor in because I am mostly paying interest? If anyone has an experience with live-in flips and how they analyze the deal in these scenario I would really appreciate the insight.

Hello Everyone,

First time posting, thank you in advance for any and all help! I am new to BP and investing in general but believe we have a great opportunity to pursue that I am looking for advice on.

We have an elderly neighbor that has been moved into an assisted living home due to health decreasing. He does not have a lot of family, his closest relative is a few states away. This relative will be handling most of his estate issues moving forward. We see an opportunity to make an offer on this house for a flip because the house has not been updated in a long time and we believe the relative will want a quick/easy sale. 

My question is: What is the best way to make a deal without having the relative list the house publicly?

This would be our first deal, so the financing piece is very new to us. We have $50k saved and great credit. We are comfortable making an offer up to $300k. Can we do this deal with FHA or standard financing? What other options do we have? What type of financing (besides cash) are most appealing to a seller and why?

Thank you,

MP