All Forum Posts by: Nick Causa

Would love anyones help here. My wife and i have been on our FI journey thanks to Bigger Pockets and it has been as rough as I’m sure anyone starting out in anything should experience. My question is this: we finished up a renovation on a multi family last year and live in the property and rent out the other unit. We also own a lake home that we airbnb. What we were looking to do was BRRR the multifamily but are now stuck in the refi portion of this method. The reason being is that we took out loans and credit card debt to complete the reno (which was NOT supposed to cost what it ended up costing so there were more loans than anticipated) and our credit is now adversely affected (670) which tuined the cash out refi. So now we cant pay back the debt because we cant access the $ in the house. If we could refi, we would knock our monthly mortgage payments down about a $1000 a month because we will lose PMI, theres a lot of equity in the home and the rates are great. Any suggestions other than just slowly paying down the loan balances to rebuild credit (which is taking forever).

Wanted to run this by someone. Disclaimer: We’re new to this and I’m well aware we more than likely screwed ourselves so no need to kick us while we’re down haha: My wife and I are in the appraisal portion of our live-in BRRRR. In June 2018 we bought an updown duplex for $625,000 ($289/square foot) with a 3.5% FHA out of a HELOC from our previous primary residence. The duplex appraised at that time at $660,000k ($306/square foot). After the pain free $200k renovation process (sarcasm laid on thick here) which included gutting one of the units, adding a bedroom, bathroom and 305 square feet and upgrading the other unit cosmetically. This almost doubled both of the rents on the two units bringing it from $3500 to a now $6000/month. So after 2 years of living through this (2 years where the local market is appreciating by the way) we just got the house reapprasied for our “Refinance” portion of our BRRRR and it came out to $735,000 ($298/square foot with the new square footage included). I had to scoop my jaw off the ground. I looked at the comps in the appraisal and they’re all not up to the same condition as our newly renovated house and theyre all listed as “good” condition when theyre clearly in disrepair and ours is just updated. I’m assuming this is because we now have the “nicest house on the block” problem and priced ourselves out of the market? I know these things arent a finely tuned science but something here doesnt add up no? How could we have gone from $305/square foot to $298 after all of those upgrades and in the middle of an appreciating market. Were appealing the appraisal but i dont see this appraisal now coming out anywhere near where we need. Im guessing were a product of “youre only as good as whats around you”?? Any insights from you all out there is greatly appreciated.

@Carl Crump Hey you mentioned Portfolio lenders being able to do an 80% cash out. Is there somewhere specific i can look for them?

We have a HELOC that we use on our home but we would like to refinance the first mortgage. Since the HELOC is basically a second mortgage, it shouldnt have anything to do with the first mortgage that we want to refi correct?

@George W. Perfect thanks so much!

I know a lot of people who flip and do renos have certain materials they like to use as go-tos because they know they look nice and are affordable. Anyone have some they’d like to share? My wife and I are about to reno one of our units for a rental and want to know if anyone has any suggestions on materials or design combos/templates they use on all of their rentals. Thanks!

@Michael Glist thanks again. Seeing as we’ve already locked down an architect and a contractor, and should start renos next week or so, it may be a little late for the 203k option. Sounds like we’ll be doing it the old fashioned way then.

@Michael Glist thanks everyone. We bought the house as an FHA last year so there isnt that much equity in the house. I cant remember the reason we didnt do a 203k from the beginning (pretty sure it was a good one haha) but at this point I dont want to refi and pay closing costs to do the whole thing over again. Since we’re renoing one unit, then the other, would it make sense to refi after renos of the first unit are done? In the scenario we’re in right now, we have the money for the first units renos. We would just have to wait a long time to save $ to finish the second unit, then refi to pull the $ back out. Any suggestions?

In researching some hard money lending options for the rehab of a multi-family im living in, I noticed many lenders do not lend to owner occupied borrowers. Theres probably a great answer as to why but what is the reason for that? We’ll be living in one unit while renovating the other then vice versa.

@Diana Muresan ok yes this will be owner occupied as my wife and i will live here when we refi. The 5% would make all the difference up front since it will reimburse us of our reno costs. Thanks so much