@Jessie York BRRRR is just a cute term used to describe the strategy real estate investors have been using forever. You leverage the equity in your existing property as a down payment (or partial down payment) into your next asset. Rinse and repeat.
If you just acquired the property, you might want to season the loan for a few more months (check with your lender). Also refinancing and/or getting a new loan isn't free. You will be charged points and other expenses. So do a break-even analysis to make sure you are in a beneficial situation.
Thank you Omar! I didn't know about the fees. I've put in my first offer on an investment property (short sale) and was planning to use the built-in equity to purchase my next place, assumming all goes well. Now I know it's not quite that straightforward.
Also, you don’t get to borrow 75% “of the equity”. If you qualify, you can refinance up to 75% Of The Value. So, that number, less your current loan balance and refinance fees is what cash you could get out (much less than 75-80% “of your equity”).
I’m surprised someone let you tie up a short sale without showing the ability to buy.
I have $23,000 in equity on this purchase & 75% of that is $17,250. So probably after closing cost & other fees I could only get about 14 to 15k out?
Again, you can't borrow "75% of the equity".
$75,000 @ 75%= $ 56,250
You could refinance for $56,250 after 6-12 months.
56,250-52,000=$4,250 cash out, less refinance costs of maybe $2k.
It's not going to make sense.
Ok sounds good thanks for info! I’ll just let it cash flow for a while then make a move.