How You Can Use Rehab Refinance and Cash Out as Long-Term Wealth Building Real Estate Investing
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
How to Build Long-Term Wealth with Rehab, Refinance, and Cash Out in Real Estate Investing
Overview
Today, we'll delve into an advanced real estate investing strategy called Rehab, Refinance, and Cash Out. This approach is ideal for seasoned investors seeking long-term wealth and financial independence. By employing this strategy, especially in a buyer's market like Memphis, you can complement your wholesaling and retailing efforts, ultimately leading to substantial wealth accumulation.
The Strategy Explained
The process begins with identifying a promising 3-bedroom home from a motivated seller, ideally at 60% of its after-repair value. Use a hard money lender to finance the purchase and renovations. Once the home is rehabbed, manage it with a property management firm that finds renters for you.
Next, secure an investor-friendly mortgage to refinance at 80-90% of the property's after-repair retail value. This step allows you to cash out, potentially earning at least $10,000 per property, which you should reinvest in growing your real estate business.
Building Wealth Over Time
With this strategy, completing 10 deals can give you a financial edge, enabling faster closures and better opportunities. Executing this strategy on 20 properties could yield approximately $200,000 in cash, $200,000 in equity, and $2,000 per month in positive cash flow?"even without active work, thanks to professional property management.
With annual rent increases, this passive income could double within five years. Over 30 years, your real estate portfolio could be worth $2 to $3 million in paid-off properties. This method not only supports immediate gains through wholesaling, retailing, and lease options but significantly enhances overall portfolio growth.
Ensuring Positive Cash Flow
This strategy depends on maintaining positive cash flow after deducting management fees and loan costs. If cashing out isn’t feasible or the financials don’t add up, reconsider holding onto the property long-term.
Financing Tips
For purchasing, options like http://www.pleaseclose.com/memphistrading are available if your Equifax credit score is above 550, or if you have a co-borrower meeting this criterion. Ideally, aim for a middle score of 660 or higher to secure favorable rates, with the best rates available for scores of 720 or more.
Focus initially on acquiring up to 10 investor mortgages in your name and 10 in a spouse's name. Beyond that, collaborate with investor-friendly mortgage companies to continue scaling your portfolio. Networking with other investors can help identify the best mortgage options.
Management and Growth
Avoiding direct landlord duties can free up valuable time and energy. Instead, engage a reputable property management company, starting at a 10% fee that can decrease with more properties under management.
Recognize that this strategy might not provide immediate cash returns, taking 4-6 months to see financial gains. However, if you're consistently earning through wholesaling, this method will amplify your profits, offering a solid progression from finding deals for others to securing cash-out levels akin to multiple wholesale deals?"albeit with a longer timeline?"while concurrently building a robust future nest egg.
You can find the original non-AI version of this article here: How You Can Use Rehab Refinance and Cash Out as Long-Term Wealth Building Real Estate Investing.
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