The Wealth-Building Benefits of Buying, Keeping, and Refinancing

1. The Wealth-Building Benefits of Buying, Keeping, and Refinancing Most real estate owners used to focus only on fixing and flipping properties. The model has shifted in today's environment with strong demand and increasing home prices to buy, rehab, rent, refinance and repeat (BRRRR). More seasoned buyers, and more of our clients, are opting to purchase and keep rather than flip. They are using this approach to expand their real estate holdings by borrowing the equity from their rented properties to purchase additional houses – a wise move, particularly when housing values rise and rents rise. The purchase, rehab, and rent components of BRRRR are all vital to your progress but don't overlook the refinance stage. Corridor Funding has assisted numerous clients in refinancing Fix-and-Flip loans into long-term loans, freeing up money to invest in other assets. The way it works is that a customer would begin with a Fix and Flip loan. They refinance their hard-money debt into a longer-term loan after the rehab is complete, allowing them to rent out the property and take advantage of the tax benefits that come with waiting to sell. BRRRR TAX ADVANTAGES The tax benefits of BRRRR are substantial. You will make a lot of money easily if you flip, but you can pay higher taxes. You prevent the taxable case of selling the property by refinancing. Furthermore, refinancing enables you to take advantage of the new accelerated depreciation rules (watch for a future blog post on this topic, coming soon). One of the main tax benefits of real estate investing is depreciation or the loss in the valuation of an asset over time. Real estate holders would benefit even more from accelerated depreciation, which allows them to take a larger deduction by claiming the full amount of depreciation in the first few years of ownership. Even for high-income taxpayers, accelerated depreciation lowers or eliminates taxes. For many years of owning the property as a rental, several smart owners would take rapid depreciation. They sell the property by taking full advantage of the rapid depreciation, mostly to the same occupant and with seller financing. At the time the transaction closes, the lender will know that he or she is negotiating

2. with a prompt payer because once the pride in homeownership is factored in, they are most likely to pay on time. Many of Corridor Funding's clients sell their homes to former tenants who do not qualify for a traditional loan, but if they hang on to the mortgage note, they can either get a higher interest rate, or they may want to sell the note and recycle the cash when the time comes. THE FAST CLOSE, LOW COST, BUY & HOLD LOAN IS NOW AVAILABLE The process begins with refinancing out of the original hard money loan. Time is of the essence, which any fix-and-flip or buy-and-hold trader understands. After all, the first rule of real estate is that money is made as you buy, so negotiating with a developer who will 1) bring you into the "value add" play and lend you the renovation money to get it to rent ready, and 2) get you quickly into a corresponding loan that allows you to optimize cash flow while closing the loan quickly is critical. Traditional banks don't understand the urgency, because it can take up to two months for a refinance to close while they review your financial balances, tax reports, and pay stubs from your first career as a teenager, among other documents. Corridor Funding provides two fast refinancing opportunities. The Fast Close, Low Cost, Buy and Hold Loan, a 5-year balloon loan amortized on a 30-year principal and interest plan, is our top pick. It's only open to current clients who started with a fix-and-flip loan from us. As our client, you will be able to take advantage of the 60-month loan until your home is rent-ready and has three veteran rental payments. This is an accelerated depreciation loan available to SFR and multifamily property owners who purchased their homes using one of our short-term acquisition and construction loans. This loan has multiple benefits for the professional real estate investor: A 60-month loan for a 30-year amortization period Financed into your preferred LLC or entity Your credit rating would not reflect an extra mortgage, lowering your credit score because your debt-to-income ratio increased. Interest rates are reportedly hovering about 6-7 percent. Fast closing in 2-3 weeks, compared to our 30-year fixed closing in 3-4 weeks. You're paying down the principal balance and optimizing depreciation deductions, with one of two traditional exits in mind: 1) cash-out refinance to buy new assets and generate more passive profits, or 2) sell with owner financing (still creating passive income). You're increasing your passive profits while simultaneously increasing the value of your residential property. ● ● ● ● ● ● ●

3. Most notably, this procedure allows you to focus on what you do best: finding real estate DEALS to buy! Corridor Funding also provides 30-year loans to borrowers that do not have the ambitious aim of constructing a passive income stream from a portfolio of many single-family rental homes. However, for those who purchase two or more homes a year, the Fast Close, Low Cost, Buy & Hold Loan is perfect because it allows borrowers to redeploy funds into new investments. IMPORTANT LESSONS FOR REAL ESTATE INVESTORS Homes are in high demand in the current market, prices are increasing, and rents are rising as well; all of this provides an environment in which buy-and-hold investor portfolios will accumulate value and increase their real estate portfolios. Refinancing is one of the most significant Rs in the BRRRR formula. The best loan package would increase your tax gains while still allowing you to invest in other assets. Time is of the essence when it comes to a hard money loan. You would refinance as soon as possible to prevent going past the expiration date of your short-term loan and incurring higher interest and loan extension fees. The tax benefits of BRRRR are substantial. You prevent the taxable case of selling the property by refinancing. Refinancing also helps you to take advantage of the new accelerated depreciation rules. Consult your CPA on your real estate investing tax plans. ● ● ● ● ● Get underway right away! Corridor Funding's experts will help you refinance your investment land.