After being on BP coming on my 3rd year now.. one of the frequent repeat questions is from those wanting to get started in cash flow rentals but have limited cash but great W 2 and Credit.
Let me take you back to pre 08.
The turnkey or investor market went mainly like this.
Investor desire to own cash flow rentals and had as stated above great qualifications but was limited to one at a time based on their down payment...
We solved this problem with the BRRR method Yes we were doing BRRR in 2001 and routinely until 08 when credit markets froze.
The key was building a team.. and those teams were built for you by most of the Turn key marketing companies and those flippers in the cash flow markets.
The key component was the short term lender ( us ) who put the investor ( you ) into title for 6 months so that you could then do your refi and have little to no money into your cash flow rental.. In those days 100 a month was an acceptable positive cash flow number that number has moved up some to 150 to 200...
So fast forward to today and how do we do BRRR which as some think is a new concept but not really is quite an old concept.
Well you pay cash then refi and pull all your cash out.
To do this in todays market one needs to build their team.
Find your short term lender usually HML who will team with a flipper or turnkey company.. now not every lender will do this .. ( I know I specialized in it and I was the driver creating the teams. ) but it can be done.
Your other team member is a great refi conventional lender who specializes in these assets.. there are many on BP that can help there.. the key is you get pre qualified.. Once you have your take out all qualified its easer for your short term lender to finance the deal.
In the good ole days I only required a few thousand down.. but these are not the good ole days so you probably need 10 to 20k to make this work got to have some cash into the deal.
You then hook up with your trusted Turnkey provider or REhabber of choice.. and you buy the asset pre development.
There by getting a good buy.. the turnkey provider will put his profit in up front on the wholesale buy just like any wholesaler .. then because this turn key or rehabber has an established relationship with someone like me.. a trusted HML we as the HML then do the rehab draws and make sure rehab is done to spec's and once its done then your refi lender sends in the appraiser for the 442 and your refi goes through.. remember your in title .. so this is a refi..
this is how we did about 2000 of these from 01 to 08.. Now in those days our clients usually did a 75 % refi and usually got 2 to 5k back in refi proceeds and we usually did 4 at once... So 8 to 20k back at closing ( which should be used for reserves and not go out and buy a jet ski or a car LOL) and 100 a month to now a days 800 a month positive cash flow and in that scenario no cash in it actually cash out.. now today you will probably have to leave some money in 5 to 10k per prop.. but in many cases you should get all your money back.
The key will be forming the team and finding the players in the fields to do this...
Good luck with it .. it works very well for all you 740 fico's and 20 to 40k in the bank and a burning desire to own cash flow. Do this 4 times .. the move to your 10 loans then move to your portfolio lenders and in 3 to 5 years you have a nice portfolio making you 2 to 5k a month positive cash flow with very little cash out of pocket.
Now last comment me personally any positive cash flow in this particular method since you have little to no money invested I would use to accelerate pay down of mortgage..with the goal to own these in 10 to 15 years free and clear that's when you get truly wealthy in real estate paid for cash flow assets.
