A Dream Kitchen . . . For An Investor

Any mortgage company that . . . exists won't lend on a house with a kitchen that looks like this, right? And that's the reason investors who have the cash (or have a connection to someone who does have the deep pockets) are able to come in and snatch up these properties - quite often in good neighborhoods - for REALLY low prices. Until the new kitchen is installed and the house goes up for sale because it's now "lendable" in the eyes of the mortgage industry, many investors who have limited funds have to wait to recoup their cash to move on to the next project, all the while they're watching other great opportunities being gobbled up by someone else - UNTIL NOW!

If you're a fix-n-flipper, there's a way to get your cash back IMMEDIATELY once the rehab is completed and BEFORE you sell it. If you're a buy-n-holder, there's a way to get your cash back AND THEN SOME. Let me show you:

FIX-N-FLIP

You buy the house for $85K in cash and put in a basic kitchen for $15K (that’s all that’s needed to make the house “lendable” in this case).
Have the house appraised – let’s say it comes back at $175K – and refinance it based on that new appraised value.
You can IMMEDIATELY pull out 75% of the new appraised value or 100% of the cost of the purchase, whichever is lower. In this case, 75% of $175K is $131,250, so you could pull out $85K, which was the purchase price.
Without having to wait until you sell the home, you can turn around, take that $85K you just pulled out, purchase another distressed property, and do it again.

BUY-N-HOLD

Same scenario: You buy the house for $85K in cash and put in a basic kitchen for $15K (that’s all that’s needed to make the house “lendable” in this case).
Wait just six months, then have the house appraised – let’s say it comes back at $175K – and refinance it based on that new appraised value.
You can pull out 75% of the new appraised value. In this case, 75% of $175K is $131,250 – and your initial investment was only $100K ($85K for the purchase and $15K for the repairs). Who DOESN’T like making over $30K in just six months?
You now have a property worth $175K that you’ve been renting out and is now paying your mortgage (and then some), a mortgage of only $131,250 on a $175K property, and you have $131,250 to go out and acquire another distressed property.

Whatever your approach to Real Estate Investing, it's like the directions on the back of a shampoo bottle (slightly modified): purchase, refinance, repeat.

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