5 common mistakes with the buy, fix, refinance, rent strategy

– Welcome, this is Rene Masse with Atlaray Property Investments. Now, we’re taking the
opportunity to film outside because it’s a beautiful
day in Kingston, Ontario. And for those who might want to know, this is a 1966 Chrysler 300. It’s been in the family since
’72; it’s a pleasure to drive. If you ever come to Kingston, we’ll do a little spin with it. (static crackling) This video is about the buy, renovate, refinance, and rent strategy. Now I’ve used this
strategy on numerous times. Before we get into the details on the mistakes that are
common with this strategy, you really need to buy a
property that nobody wants. So a property that even the realtor won’t even step into the
house, is a good sign. Or it’s such a big mess in the house; perfect, great property to buy. Like a private sale or
for one reason or another the people want to sell right away, like there’s a divorce in the
family or there’s a death, they just want to discard
this property quickly. You’re there for the right time, the right property, and you pick it up. The second thing you want to
keep in mind with this strategy is you want to make sure that the purchase price plus the renovations does not exceed the refinance value. So let me give you an example here. Say that you buy the property at $200,000 and you put in $50,000 renovation cost. Well you want to make sure that the appraisal value far exceeds $250,000; it really should be in the range of $300,000, $325,000, and even more; that way you can refinance and recoup the money you put into it. So what do you renovate in order to add value to the building? Well, watch my other video right here to find out what items you
need to renovate to add value. Now here are the common
mistakes with this strategy. You really need to get the right mortgage. It cannot be a closed mortgage. Better off, get some private
money to buy the building and then you can refinance quite quickly. Most lenders will not want to refinance prior to three months of the
purchase of the building. So keep those things in mind; there may be a cost to hold the building. So make sure that it’s
an open mortgage as well, that way you can break the mortgage and then refinance it and
then everyone’s happy. Number two, you want to make sure you know the cost of renovations. So, what’s the cost of
putting in those new windows, what’s the cost of a new kitchen? Or the square footage of
new hardwood flooring, the cost of laminate flooring
as well will make a difference and the cost of painting,
these costs are very important to know, when you’re going
to be looking at a property you need to know exactly how much it’s going to cost you in renovations. So number three, you want to make sure you get an accurate after-repair
value of the building. So even before you purchase it, you want to make sure you know exactly how much this
building’s going to be worth after you’ve done the repairs. How do you go about it? You need to work with the right realtor and get the right
comparables and figure out exactly what it’s going to be worth after all the repairs are done. Number four, a common
mistake with this strategy is actually not knowing
what you can renovate and what you shouldn’t renovate. For example, a kitchen. Do you need to tear up the whole thing, or simply paint the cabinets? A roof, do you need to
simply fix the trusses or re-rip the whole roof out? These can make huge difference
in your calculations, so you need to know those numbers. Here’s a fifth common mistake: accepting the refinance amount as is. Now if you’re not happy with that amount, you should not accept it. You get another appraisal, simple as that. If you want more information about that, watch my other video right here about how to boost your appraisal value. Hopefully you’ve found this valuable; if you have click like,
leave comments below or subscribe to my channel. Thanks for listening.
(engine rumbles) (“Mission: Impossible” by Lalo Schifrin)

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