All Forum Posts by: Patrick Cruse

@Edward Rhoads why would an answer to the question I asked not be what I wanted to hear? I appreciate your honesty. 

@Jeremy Pakalka Would it benefit me to get it appraised before it is repaired though? Wont they just quote me an appraised price on its current condition?

I just got an offer accepted on 2249 N Graham Ave. Indianapolis, IN 46218. 

My plan is to do the BRRRR strategy with it. One issue I didn't foresee was that it seems like a lot of banks have a minimum loan amount and this house falls dangerously close to that level.

I have found some banks that would be willing to do a cash-out refi at 75% LTV if and only if it appraises for $60,000 or more. This could throw a wrench into my strategy if I can't find a way to refinance the house once it is fixed up and rented.

Does anyone have any estimates they'd like to share about what they think the appraised value of this house would be after repairs? Are there changes I can make during rehab that give the house a better chance to appraise for a higher amount and over that seemingly magical $60,000 number?

Any help is appreciated and I am willing to provide any other information that would make your estimating easier. 

Thanks.

I just got an offer accepted on my first rental and plan to do the same cash-out refi that you want to do, but I am finding that banks often have a minimum loan amount. I have found that it is often $45k (so for a LTV of 75% on a house that appraises for 60k). I think there are banks around that will do it, but they are hard to find and might have higher interest rates than you are expecting to pay. I'm interested to hear if you have thought about this issue and what you plan to do about it?

@Dante Pirouz Thanks for the recommendation. I called Visio. It seemed like they offered just what I was wanting. A 30 year fixed loan with 30 days seasoning. However, their minimum loan allowed was $45k at 75% LTV which means my house would have to appraise for $60k. That would be pushing the ARV of my house. I think it was a 5.99% loan, but we didn't get that far since I don't know what my house would appraise for yet.

@Dante Pirouz I was hoping you would say that. I can handle the waiting period if I have to. Not being able to do it all would be a deal breaker for me though. 

I just got an offer accepted on a HUD house for the purchase price of $20,700. I estimate the rehabs at $25,000. I think the ARV will be $58,000. I planned to rent it out and do a cashout re-finance once it was rented out. I was planning on doing a 75% cash out for around $43,500, which would leave me coming out of pocket for approximately $2,500.

I have read that I should plan on shopping around for local banks that work with investors. I also read that I can expect to get rejected a lot in the process of finding one that will work with me.

At first, I thought my biggest hurdle would be to find a bank that didn't require a 6 month seasoning before doing my cashout re-fi. I thought that once the 6 month period was passed I would be able to find lots of banks that would work with me. 

I found a lender on my local CIREIA page that works with investors. I asked her about the seasoning period and she said they make loans without that waiting period. However, when I called her with the details of my house and what type of loan I wanted she basically told me that was impossible because of the Dodd-Frank law and the price of my house. She said they can only do a cash-out re-fi on a loan amount for greater than $50,000 and possibly $60,000 if it was an investment home. It had something to do with the APR not being allowed to be greater than 3% (I was confused about this part).

If this is true it will throw a major wrench into my plans to be buying houses in this price range to do the BRRRR strategy on. Is it true that it is impossible to do cash-out re-finance loans on loans for less than $50,000 or do I need to just keep shopping lenders?

I'm interested to find out how this goes and would appreciate any updates. I will be doing similar projects in similar areas in the near future and would benefit from learning about your process/mistakes (hopefully there aren't many). 

What you are describing looks like the typical BRRRR strategy. What areas of your specific approach are you wanting advice on?

How much are you expecting to pay (or make) out of pocket after your re-finance?

Thanks to @Ben Wendt @Ben G. and @Dayn Beals for their great replies. 

I agree that before any works gets done that I should have a much more detailed scope of work and have exact price estimates laid out. However, I am just looking to get a rough estimate of how much I can expect to spend on this rehab. In my opinion, a difference of $1,000 would be a big deal when dealing with exact estimates for actual work from a contractor. However, in this situation, just knowing within a $5,000 range how much rehab is going to cost would be very helpful in determining if this will work for me. 

I have reached out to a few contractors to just do a 15 minute walk through with me in exchange for a $100 bill, but haven't been able to organize one yet. I am mostly just looking for peace of mind here and not exact numbers. 

@Adam Abdel-Hafez Thanks for the input. I just sold my house in Vegas and relocated to the Indy area. We are renting a little apartment here until we figure out exactly where we want to live and find a house. Anyway, our apartment has the vinyl plank flooring that you are talking about in it. I was mistakenly referring to it as "laminate", but that is what I had in mind to put in the rental. It seems really durable and looks great. 

I think scrap granite would actually work well in the house since none of the counter tops are very large. 

Thanks again for your help.

Patrick