Tag Archive for: The Cash Flow Company

DSCR Loan: How to Qualify for The Maximum Loan Amount

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DSCR Loan: How to Qualify for The Maximum Loan Amount

Many investors wonder how they can qualify for the maximum loan amount when using a BRRRR strategy or DSCR loan. When you are looking at a DSCR, there are two different qualifiers that you need to keep in mind. This includes the break even point and the LTV for the property. Whether you are using the DSCR loan for a BRRRR, refinance, or a purchase, it is important that you look at the qualifiers first. 

How much money can you get when using a DSCR loan?

The guidelines say that on a DSCR loan you can get 80% for a purchase or 75% to 80% for a refinance. Just to clarify, that means that you can get 75% to 80% of the current appraised value. While the DSCR guidelines say that you can receive that percentage, we always advise customers to hold off. We recommend that they wait because there are additional underwriting guidelines that need to be taken into consideration.One of which is a concern as to whether or not the property will qualify for 75%. Remember, DSCR loans are based on a ratio that indicates where the property breaks even. What does break even mean? Breaking even is determined by comparing the money coming into the property to the expenses. The expenses include the principal, interest, taxes, HOA, and flood. 

Each property is unique and each situation is unique.

A property appraised for $400K and the customer wants 75% cash out or rate and term. If their credit is good, property is good, and it is rented, then they could get 75%. However, we also have to determine whether or not the property breaks even. While it is appraised for $400K, is it bringing in $3K or $2K a month in rent? This amount can vary greatly depending on where the property is located and the current market. Each property is unique and each situation is different. Not only will the rents be different, but the taxes and insurance will be different as well. It is imperative that you run the numbers and find the DSCR ratio prior to purchasing. Now just imagine that the taxes and insurance are the same, but the rents are $1K off. The $2K rent is going to qualify for a smaller loan amount. 

Break even point and LTV go hand in hand.

Each property is different on where it can break even and the LTV you can get on the property. Even if the guidelines say 75% to 80%, we have to take into account the rents, credit score, and rate. The higher the rates, the higher the payment, and the faster you hit the threshold where you break even. When comparing a $300K property to a $200K property, maybe the $300K property gets 75% because their DSCR ratio is above 1. This is because the property is either breaking even or greater. However, the $200K would only get $250K because the property breaks even at that loan amount. Just to clarify, the $50K difference is not impacted by the customer’s credit score. It is dependent on the break even point.

Maximize your loan amount today!

In order to maximize your loan amount you need to understand your numbers beforehand! Whether or not you are purchasing, refinancing, or using the BRRRR strategy, you need to know what loan amounts will be available to you. For those using the BRRRR strategy, knowing your numbers ahead of time is going to be the key to your success. If you are using a DSCR, you need to make sure that the property qualifies based on rents so that you can refinance in the future. Don’t run the risk of being $50K short! Always keep in mind that each property is unique and every situation is different. Watch for our next video as we walk through the numbers to show different scenarios that will affect your maximum loan amount.

Do you have a property that you would like to run the numbers on? Contact us today to see what your DSCR ratio would be for your next property. 

Watch our most recent video to find out more about DSCR Loan: How to Qualify for The Maximum Loan Amount.

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DSCR and BRRRR: The importance of refinancing

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DSCR and BRRRR: The importance of refinancing

Today we are going to talk about the importance of refinancing when using a DSCR loan and BRRRR strategy.  Here at The Cash Flow Company we are averaging 10 to 15 calls a day regarding the fundamentals. This includes knowing where to start, what you need to do, and how to be successful. In order to be successful, it is imperative that you go over the numbers first to make sure that you are getting into a good property. In doing so, investors can then determine if the property is a profitable investment. 

What is the BRRRR strategy?

What exactly is BRRRR? BRRRR stands for buy, repair, rent, refinance, and repeat. The main purpose of BRRRR is to get into properties using little to no money out of your pocket. Those who use this strategy correctly will be able to accumulate “value at” properties quickly and create a portfolio. Just to clarify, “value at” properties are those that are under market value and need work done. These are often hoarder houses, in need of yard cleanup, and ones that need maintenance or repairs. Whether the current owners were unable or unwilling to fix up the property, it creates the perfect opportunity for investors. By taking the time to fix up the properties, you will in turn create net worth for the property.

Two loans, one goal!

With BRRRR you need one loan for the purchase and repair, plus a long term loan for the refinance. The short term loans are often a hard money loan or a private loan ranging from 10% to 12% interest rates. It is important to keep in mind that these loans are only temporary, lasting 6 to 12 months. After that time, the loan balloons. That is why it is so important to have a long term loan option available when using the BRRRR strategy. Many investors use a DSCR loan for their long term loan because it is based solely on the property and their credit score. One thing to keep in mind is that the LTV is different for each person and for each property. In the end you need to determine if your expenses equal your income prior to purchasing the property. Unfortunately,  many people do not do the research up front or run through the numbers before making the purchase. Don’t wait until the refinance! Take a look ahead to make sure that the property you want to buy will be able to cash flow later on. 

Look ahead to ensure success.

One of the most important pieces of the BRRRR strategy is refinance. A refinance is needed so that you can carry the loan long term. While buying the right property is important, it is crucial that you look ahead and understand the importance of refinancing. Oftentimes investors get to the refinance and either can’t get a loan or they can’t get enough money to cover their costs. In either case, it would defeat the purpose of using the BRRRR strategy. By doing the research up front and making sure that the whole thing works, you will actually make money. A lot of people don’t take the time to work through the numbers. Instead they discover during the refinance closing that they are going to lose money.

What is a DSCR loan and how can it work with BRRRR?

A DSCR loan is based solely on the property and your credit score. If the property’s income or rents are not very high, then you’re not going to get that big of a loan. The lenders will decrease the LTV until the break even point or sometimes higher. In the end, the lenders need the income and the expenses to be the same. This is referred to as the DSCR ratio. Just to clarify, expenses include the monthly payments, taxes, insurance, HOA, and flood insurance. One thing to keep in mind is that the LTV is different for each person and for each property. In the end you need to determine if your expenses equal your income prior to purchasing the property. 

For example:

An investor is using a DSCR and buys something where the purchase, rehab, and everything puts them at 80%. However, the property itself only qualifies for 70% because of its break even point. While many think that they are good because they bought it and are into it for 75% to 80%, this is not always true. When it comes to refinancing the property, lenders can only do 70% to 75%. It is confusing and often daunting because there are so many moving parts. However, by laying it out and making sure that the property cash flows, you will be successful.

We are here to help!

Here at The Cash Flow Company, we are happy to run through the numbers with you to make sure that you are setting yourself up for success. That would include checking your rents, taxes, insurance, and LTV to make sure that you would qualify for a long term loan when you go to refinance. Don’t chance being surprised at the refinance closing! Take the time now to run through the numbers and ensure your success for the future! 

Contact us today to see if a DSCR loan and the BRRRR strategy are right for you!

Watch our most recent video to learn more about DSCR and BRRRR: The importance of refinancing.

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How to Finance a BRRRR Investment

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How to Finance a BRRRR Investment

Today we are going to discuss how to finance a BRRRR investment!  Just to clarify, BRRRR stands for buy, rehab, rent, refinance, and repeat. Financing is often the biggest roadblock that investors face when using the BRRRR method. However, by using it correctly, you can put little to no money in and win the real estate investing game.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

Finance a BRRRR investment today by making sure that you find under market value properties and can qualify for a long term loan. In doing so you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to learn more about How to Finance a BRRRR Investment.

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DSCR Loans: Top 3 Questions Everyone Is Asking

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DSCR Loans: Top 3 Questions Everyone Is Asking

DSCR has really been taking off in the last 6 months! Today we are going to talk about the top 3 DSCR loan questions everyone is asking. As rates continue to come back down and properties start to cash flow again, many investors are coming back to DSCR. It is an excellent product for real estate investors to use for their next property!

First, can you get a DSCR loan for more than 4 units?

Typically there is a lending box that you fit into when you own a 1 to 4 unit. As a result, those who have 1 to 4 units have a lot of loan options available. We have had a lot of questions regarding lending options for properties that are not in that range. Anything over 5 units is considered a commercial property. Here at The Cash Flow Company we are working with a few investors who have an 8 plex, 12 plex, and even a 24 plex. For these customers, there are DSCR options, however they are considered commercial loans. Commercial loans are just a little bit different, but there are more options available now then there were in the past.  

Second, what kind of documents do you need when you are applying for a DSCR loan?

If you are doing a refinance, you will need:

  1. Lease agreement – What are you leasing?
  2. Business setup – What is the operating agreement and who runs the company?
  3. Reserves – You need a couple months of bank statements that show 2-3 months of reserves.
  4. Taxes – Needed for DSCR ratio.
  5. Insurance: Needed for DSCR ratio.
  6. HOA – Needed for DSCR ratio.
  7. Flood – Needed for DSCR ratio.
  8. Title 
  9. Appraisal – An appraisal will show the value of the property.

Once you have the appraisal and everything you need for the DSCR, it normally takes 2 to 3 weeks before everything is finalized.

Third, what happens if the property doesn’t break even?

The DSCR ratio is what everything is based on. The DSCR ratio is the breakeven point where the rents equal the expenses on that property. Just to clarify, expenses include your payments (principle and interest), taxes, insurance, HOA, and flood insurance. When the rents are equal to the expenses, there is a DSCR ratio of 1. If the property is not cash flowing, then the DSCR ratio will be less than 1. While there are still options available for investors whose ratio is less than 1, it is often at a higher interest rate and lower LTV. There are options for no income as well that will go down to 75%, while other lenders might not even check income. 

There is something for everyone!

DSCR loans have a lot of options available to fit your investment needs. Whether or not you have a break even property, or one that is struggling to cash flow, there is something for everyone. DSCR is becoming more of a mainstream option for investors. What types of properties are growing in DSCR popularity? The answer is commercial, 5 units, rural properties and many others. These properties no longer have to fit in the lending box. DSCR is opening the doors to endless possibilities. Do you have a unique rental property and are looking for more lending options? If so, contact us today to find out more about DSCR loans and how you can get under the DSCR umbrella! 

To find out more about DSCR loans and calculate your DSCR ratio contact us today!

Watch our most recent video DSCR Loans: Top 3 Questions Everyone Is Asking to find out more!

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DSCR Loans and BRRRR Properties – Fundamentals Explained

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DSCR Loans and BRRRR Properties – Fundamentals Explained

Today we are going to talk about DSCR loans and explain the fundamentals that you need to keep in mind when working with BRRRR properties. Here at The Cash Flow Company we are averaging 10 to 15 calls a day regarding the fundamentals. What are the fundamentals? They include knowing where to start, what you need to do, and how to be successful. In order to be successful, it is imperative that you go over the numbers first to make sure that you are getting into a good property. Investors need to determine whether or not the property is cash flowing before diving in. How can you be successful and create a profitable investment? Let’s take a closer look.

What is the BRRRR strategy?

What exactly is BRRRR? BRRRR stands for buy, repair, rent, refinance, and repeat. The main purpose of BRRRR is to get into properties using little to no money out of your pocket. Those who use this strategy correctly will be able to accumulate “value at” properties quickly and create a portfolio. Just to clarify, “value at” properties are those that are under market value and need work done. These are often hoarder houses, in need of yard cleanup, and ones that need maintenance or repairs. Whether the current owners were unable or unwilling to fix up the property, it creates the perfect opportunity for investors. By taking the time to fix up the properties, you will in turn create net worth for the property.

Two loans, one goal!

With BRRRR you need one loan for the purchase and repair, plus a long term loan for the refinance. The short term loans are often a hard money loan or a private loan ranging from 10% to 12% interest rates. It is important to keep in mind that these loans are only temporary, lasting 6 to 12 months. After that time, the loan balloons. That is why it is so important to have a long term loan option available when using the BRRRR strategy. Unfortunately,  many people do not do the research up front or run through the numbers before making the purchase. Don’t wait until the refinance! Take a look ahead to make sure that the property you want to buy will be able to cash flow later on. 

Look ahead to ensure success.

One of the most important pieces of the BRRRR strategy is refinance. A refinance is needed so that you can carry the loan long term. While buying the right property is important, it is crucial that you look ahead in preparation for the refinance. Oftentimes investors get to the refinance and either can’t get a loan or they can’t get enough money to cover their costs. In either case, it would defeat the purpose of using the BRRRR strategy. By doing the research up front and making sure that the whole thing works, you will actually make money. A lot of people don’t take the time to work through the numbers. Instead they discover during the refinance closing that they are going to lose money.

What is a DSCR loan and how can it work with BRRRR?

A DSCR loan is based solely on the property and your credit score. If the property’s income or rents are not very high, then you’re not going to get that big of a loan. The lenders will decrease the LTV until the break even point or sometimes higher. In the end, the lenders need the income and the expenses to be the same. This is referred to as the DSCR ratio. Just to clarify, expenses include the monthly payments, taxes, insurance, HOA, and flood insurance. One thing to keep in mind is that the LTV is different for each person and for each property. In the end you need to determine if your expenses equal your income prior to purchasing the property. 

For example:

An investor is using a DSCR and buys something where the purchase, rehab, and everything puts them at 80%. However, the property itself only qualifies for 70% because of its break even point. While many think that they are good because they bought it and are into it for 75% to 80%, this is not always true. When it comes to refinancing the property, lenders can only do 70% to 75%. It is confusing and often daunting because there are so many moving parts. However, by laying it out and making sure that the property cash flows, you will be successful.

We are here to help!

Here at The Cash Flow Company, we are happy to run through the numbers with you to make sure that you are setting yourself up for success. That would include checking your rents, taxes, insurance, and LTV to make sure that you would qualify for a long term loan when you go to refinance. Don’t chance being surprised at the refinance closing! Take the time now to run through the numbers and ensure your success for the future! 

Contact us today to see if a DSCR loan and the BRRRR strategy are right for you!

Watch our most recent video DSCR Loans and BRRRR Properties – Fundamentals Explained to learn more!

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Where to Find Gap Funding

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Where to Find Gap Funding

In the past few days we have spoken with 4 clients who lost properties because they didn’t secure financing beforehand. While getting into real estate investing requires a lot of planning, it is imperative that investors set up their money correctly from the very beginning.  This often includes finding gap funding options prior too shopping for properties. Those who take the time to set things up correctly will have more opportunities than those who wait!

What is gap funding?

Gap funding is borrowing money from someone for the down payment, carry, or any money that you have to put into the deal. When you are buying a property, the first lender requires something in order to approve the loan. This could be a down payment, reserves for payments, or they may require you to do the fix up. Many investors don’t have the additional funds that are needed in order to meet the lenders requirements. Real estate investors might go out and find a family member, friend, or someone in the real estate community who can lend them that money to bridge the gap. It is important to make sure that your primary lender allows gap funding before purchasing a property. If the lender doesn’t allow gap funding, it could jeopardize the deal. 

How do you find gap funding?

There are a lot of people out there who have anywhere between $10K to $50K that they are looking to invest. By working with you, they have a chance to receive a better return on their investment. So how do you find gap funding? There are real estate groups throughout the community that provide opportunities for investors to meet. While peer investors are not often interested in diving into real estate themselves, they are interested in getting a better return on their money. While you can start by asking family and friends, many fear that it will create an awkward situation. By finding peer investors in the community who have $100K or $200K set aside, you will be able to compete in today’s market!

Ready, set, GO!

In order to be successful in real estate it is important that you find and secure funding prior to purchasing properties. Thankfully there are a lot of options out there to help investors. These include HELOCs, credit cards, and peer lending, just to name a few. Here at The Cash Flow Company we have seen people use multiple ways to get the gap covered. Those who take the time to  gather pre-approvals, will be ready to go when the next deal comes!

Contact us today to find out more about gap funding and what you need to do to get pre-approved.

Watch our most recent video to learn Where to Find Gap Funding

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Why the BRRRR Method Works in 2024

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Why the BRRRR Method Works in 2024

Today we are going to look at why the BRRRR method works in 2024! Just to clarify BRRRR stands for buy, rehab, rent, refinance, and repeat. This method has returned strong in 2024, and is the perfect way to build your portfolio of rentals. By using BRRRR and using it correctly, you can put little to no money in and win the real estate investing game. Would you like to learn more about building $500K in only 3 years? Let’s take a closer look!

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by understanding why the BRRRR method works in 2024. By finding under market value properties and qualifying for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to find out more about Why the BRRRR Method Works in 2024.

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This Makes a HUGE Impact on Your Credit Score

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Business Owners: This Makes a HUGE Impact on Your Credit Score

Many business owners wonder what will make the biggest impact on their credit score. The answer is using personal credit for business expenses! If you max out your personal credit card with business expenses and fail to make payments on time, then it will show up on your credit report. In order to be successful, it is imperative that you maintain your credit score. Those who do will be able to get approved for business credit cards and loans in the future. How can you prevent any further strain on your credit score? Let’s take a closer look. 

What is the credit utilization rate and how does it affect you?

The credit utilization rate is the sum of your balances divided by the amount that you were approved for. If you are above 20% of your credit utilization rate, it will lower your credit score. For example, if you have a $10K personal credit card and use $3K of it, then it will decrease your credit score. However, if you have a $5K business credit card and use $4800, your credit score will not be impacted. In many instances, your credit score will by using a business credit card as opposed to a personal credit card.

Business credit cards are a key to success.

Once you get into business credit cards, the banks will start offering you business loans as well. I receive offers almost weekly that are offering a $30K business loan or a term loan. Investors are always finding ways to bring money into their business so that they aren’t in a cash crunch. Part of that is using credit cards for down payments and escrow. By just going through one extra step to apply for business credit cards, you can continue to use credit cards without affecting your score.

Buying a property has never been easier!

A business credit card is a tool that will not only help you pay for business expenses, but it can also be used to purchase a property. There are services out there who can help you use your credit card to purchase a property as long as things are set up correctly. For example, if you have a $10K limit on a business credit card and want to buy a property for $5K, they can take it directly off of the credit card. That $5K can be used to pay the title company for the earnest money or down payment. In doing so, you can put the property under contract easily by just using a business credit card. Once the property is refinanced or sold, the money can be paid back. 

Create the flexibility you need to succeed! 

Business credit cards provide the flexibility you need to be successful.. The most important benefit to using them is that they will not impact your credit score if you run up the balances. Almost every investor runs up their balance. You are not alone! Don’t fall for the deceptive leverage of personal credit cards. By using more than 20%, it will not only affect your credit score, but it will also cost you more. 

Don’t let your business expenses affect your personal life.

While investors are trying to use the leverage that they have available, using personal credit just makes it harder. If you are a business owner who is doing flips and rental using your personal credit cards, it will affect your personal life. For example, if your wife wants to get a new car or you need a HELOC, you may not have the credit score or DTI that you need to qualify. Just to clarify, DTI is your debt to income ratio.The lenders who will be lending you money are going to see that you have $75K in credit cards and you will have to account for that in your income.

Make the change today!

Business credit cards make life easier for you in so many ways! Protect your credit score by separating business expenses from personal expenses today. Don’t make things harder on yourself! Those who make the switch to business credit cards will create the flexibility needed for business expenses, while maintaining your credit for future loans or projects.

Contact us today to find out more about business credit cards and how you can improve your credit score today!

Watch our most recent video to discover why This Makes a HUGE Impact on Your Credit Score.

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The BRRRR Method Returns Strong in 2024

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The BRRRR Method Returns Strong in 2024

What is hot today in real estate investing? The answer is BRRRR! It stands for buy, rehab, rent, refinance, and repeat. This BRRRR method returns strong in 2024, and is the perfect way to build your portfolio of rentals. By using it correctly, you can put little to no money in and win the real estate investing game.

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

It’s all about the numbers!

Both hard money lenders and private lenders look at properties to determine what the after repair value will be. In order to be successful using the BRRRR method, the ARV should be between 75% to 80%. Traditional lenders on the other hand will look at loan to value when looking at a property. It is important that real estate investors know what the loan side looks like for a property before jumping into a deal. Remember, the lower the ARV, the lower the loan, and the less you owe. By working with investor friendly loans, knowing your pieces, and knowing your numbers, you will be successful.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as to when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by using the BRRRR method. By making sure that you find under market value properties and can qualify for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video about The BRRRR Method Returns Strong in 2024.

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How to Get Pre-Approved for a Real Estate Loan

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How to Get Pre-Approved for a Real Estate Loan

Over the past few days we have had clients lose out on properties that would have been really good flips. They lost deals because they did not secure their financing beforehand. While getting into this business requires a lot of planning, it is imperative that investors set up their money correctly from the very beginning. Get pre-approved for a real estate loan today and open the door to more opportunities!

Set up financing immediately!

Those who are new to real estate investing should focus on setting up the proper financing immediately! The last thing that you want to do is to put a property under contract and not close . This could burn the relationship that you created with the realtor or wholesaler. Instead of being at the top of their list for good properties, you will instead move to the bottom of the pile.  Here at The Cash Flow Company we want to give you the competitive advantage. Part of that is making sure that you do everything correctly. It is a business!

Don’t miss out on deals!

Whether you are new or just into a new adventure, it is important to set yourself up for success from the beginning. If you are going to get into the real estate game, make sure that you are not only looking for properties, but that you are also keeping the money flowing. What do we mean by keeping the money flowing? Maybe you need 100% financing, need a second, or you’re new to flips and need to know what to do. Talk to lenders as you find properties. In doing so, you can move forward quickly on deals. 

Choose the right lender for the deal.

One of the most important things that you need to do as a real estate investor is to create a good relationship with lenders. Those who have a good relationship with their lender will be able to consult with them prior to purchasing in order to see what financing options are available. One thing to keep in mind is that your lending needs will not only change over time, but they will change depending on the property. For example, financing on a fix and flip will be different from the financing on a rental property. It is important to look around and evaluate your lending options annually in order to find the best options for you. 

How do you get pre-approved?

Before seeking out a pre-approval, it is imperative that you know what type of property you are looking for. Are you going to focus on flips, rentals, 1 to 4 units, or multi units. Those who do can then make sure that the lender lines up with what they are trying to do. How can you find the right lenders? The answer is by talking to those in the real estate community. They can guide you to the lenders who are closing, those who work with new investors, and also tell you about requirements that the lenders might have. 

Ready, set, GO!

One of the biggest hurdles for real estate investors is finding the funding needed to purchase properties! By gathering pre-approvals first you will be ready for the next deal. While building strong relationships along the way.

Contact us today to find out more about what you need to do to get pre-approved.

Watch our most recent video to learn How to Get Pre-Approved for a Real Estate Loan

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