How You Can Use Rehab Refinance And Cash Out As Long Term Wealth
Building Real Estate Investing

How You Can Use Rehab Refinance And Cash Out As Long Term Wealth Building Real Estate Investing

How You Can Use Rehab, Refinance and​ Cash Out as​ Long-Term Wealth Building Real Estate Investing
Today we are discussing a​ somewhat advanced strategy for​ you to​ use after you have been in​ the​ creative real estate investing business for​ a​ while .​
I​ call this Rehab, Refinance, and​ Cash Out .​
This strategy can lead to​ true long term wealth and​ financial independence .​
This works very well in​ a​ buyers market like Memphis where prices have been quite flat for​ some time .​
You need to​ use this to​ augment your wholesaling for​ immediate income and​ retailing for​ bigger short term profits .​
Rehab, Refinance and​ Cash Out is​ a​ long term wealth building strategy and​ will be something you will be glad you did as​ it​ is​ a​ long term buy and​ hold strategy, and​ those are the​ strategies that lead to​ true wealth accumulation and​ financial independence.
Let me explain how this works .​
You find a​ good middle to​ low end 3 bedroom home that you are able to​ buy from an​ out of​ state owner or​ other motivated seller that needs a​ little work and​ you buy at​ 60% of​ after repaired value .​
You buy the​ house using a​ hard money lender like and​ do your fix up and​ have a​ property management firm manage the​ property and​ put a​ renter in​ the​ house .​
The hard money lender will typically loan you up to​ 65% of​ the​ after repaired value to​ purchase the​ house which you use to​ buy the​ house and​ then repair it .​
Now that the​ home is​ repaired you obtain an​ investor friendly mortgage and​ cash out by refinancing at​ 80-90% of​ after repaired retail value and​ you should be doing this with properties where this strategy gives you back at​ least $10,000 at​ the​ refinance that you can use in​ your business any way you need .​
Do not use this money to​ live on, use it​ solely to​ grow your real estate business .​
Once you have done this strategy on 10 homes you should be able to​ keep finding better and​ better deals because you can close quickly as​ you have cash in​ hand to​ make things happen .​
More cash equals better deals and​ more opportunities.
By the​ time you repeat this strategy 20 times you should have at​ least $200,000 cash plus about $200,000 equity and​ 20 homes giving you at​ least $2000 per month positive cash flow whether you decide to​ work this month or​ not since you have a​ property management company handling things for​ you .​
With average annual rent increases, within five years that $2,000 a​ month should grow to​ $4,000 a​ month .​
In 30 years you should have $2 to​ 3 million plus in​ paid off real estate .​
It’s a​ good solid long term strategy to​ add to​ your immediate selling from wholesaling, retailing and​ lease options that the​ extra $200,000 in​ cash will help grow tremendously.
The rent minus the​ management fees and​ all loan and​ other costs must leave you with positive cash flow or​ this strategy should be avoided .​
If you cannot cash out on the​ property I​ don’t recommend holding it​ long term as​ you want to​ be able to​ use your best mortgages to​ cash out.
You can purchase using if​ your Equifax credit score is​ above 550(which is​ bad credit) or​ you have a​ co-borrower who has an​ Equifax score over 550 .​
a​ good investor friendly mortgage company will give you good rates if​ you are at​ 660 middle score or​ above and​ the​ very best rates if​ your middle score is​ 720 or​ above .​
Your first 10 investor mortgages in​ your name and​ 10 in​ your spouses name are the​ easiest to​ qualify and​ get the​ best deals .​
After those you really need a​ good investor mortgage company to​ work with .​
Take the​ time to​ find the​ real investor friendly mortgage companies that can help you get loans for​ 100 properties and​ not just the​ first ten and​ let them have the​ easy ones and​ the​ tougher ones .​
I​ do recommend having more than one good lender available though, but stick to​ the​ ones that specialize in​ investor loans .​
Find out from other investors who the​ most investor friendly mortgage companies are to​ use to​ refinance the​ repaired home.
I do not advocate becoming a​ landlord as​ I​ do not believe this is​ a​ valuable usage of​ your time and​ energy .​
I​ highly recommend asking around and​ finding a​ good property management company that will charge you 10% or​ less to​ start out with and​ gradually lower that % as​ you add more and​ more properties.
I feel this is​ an​ advanced strategy as​ you won’t see any cash in​ your pocket from this strategy for​ 4-6 months after you find the​ deal which is​ a​ long time to​ work and​ not see any pay .​
If you are wholesaling and​ making consistent money each month then it​ shouldn’t matter .​
This strategy will magnify the​ profits you make in​ your investing business in​ ways you might not have imagined .​
This strategy is​ a​ natural progression from wholesaling as​ you are already helping others find these kinds of​ deals, now you will be able to​ get the​ cash out typical of​ probably 2 wholesale deals, just paid slower, and​ at​ the​ same time building a​ nice future nest egg.

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