All Forum Posts by: Zachary Deal

We see lots of investors have success with MTR and STRs on SFRs w/ ADUs and 2 - 4 unit properties. As long as there is enough demand in the market it can be really successful strategy. One added bonus can be different unit sizes which allows you to target different sized groups, budgets, etc!

Thanks for sharing! Seems like you have built a great business. Keep it up!

These are all great points to consider. With the current mortgage rate constraints affecting how many buyers are willing to enter the market we are seeing a lot of borrowers have success with the BRRRR strategy with plans to sell in the next 3-5 years when interest rates go down.

Researching potential LTR and STR rental amounts and seeing if holding for a few years is a viable option is a good analysis to do well. In the event your property does not sell, pivoting to a rental could be your best option and allow you to maximize return.

As others have noted, being able to complete and inspection and walking the property with a at least one contractor is critical to understand the potential costs, etc. I would recommend planning for some unexpected costs on an extensive rehab like this, especially if the current tenant didn't treat the house well.

With those costs a new build with the purpose of selling is likely not worth it. I would explore the costs with some other contractors are 2/1, 2/2 3/1, and 3/2 SFRs are. Depending on the costs and a build to rent approach could work if you'd be willing to hold the properties as rentals. Once construction is complete you could refinance out of the construction loan into a DSCR loan.

Hi Shilo, if you haven't would recommend doing research on recently sold properties to determine the ARV of a renovated property in those areas. If you have a local real estate agent you work with, having them do some market analysis for you would be a good place to start. Good luck!

 Yes, happy to chat! Sent you a direct message/connection request 

HELOC for down payment is a good idea, if you can't fund the entire purchase price + rehab amount with the HELOC a combo of HELOC + hard money is a great way to get started.

As several folks have mentioned leveraging equity in current property you owned is a great tool but still comes with the some of risks as you had before using hard money debt as there is never a guarantee your new project will be a success (there will always be risks with real estate investing).

Leveraging your investment property would probably be the first step I would take. If you use a DSCR loan you could maximize the equity you could take out while still breaking even on the mortgage + taxes + insurance. In this case even if the project went south and you broke even or even lost money, the equity (debt) you used would still be covered by the income you are earning on the rental property.

As Pat mentioned you have a lot more flexibility with home 1 because it has no mortgage and is not owner occupied. That home would be a great candidate for a hard money loan that would allow you to quickly complete the renovations and exit. 

It may make the most sense to focus on home 1 and then leverage the funds from that sale to complete house number 2 and purchase more projects. Moving forward scaling with hard money loans may be the best bet and would avoid the headaches of living in a construction project.