BRRR on Personal Residence (BRR?)
Hello BP Community.
This maybe a stupid question, but I am curious if there is a way to utilize the rehab and refinance method on a personal residence. Say I bought a house using all cash and while living there I slowly fixed the place. The ultimate goal of eventually renting it out after a year or so, but can I refinance the property and pull the cash out while I am living there?
A hypothetical example:
I buy for $30k cash. Put $10k repairs into it while living there(a year or so) and have it appraised at $60k. Refinance at 70% LTV pulling out $42k. After that I rent it out at $700/month. Use the $42k cash to put into next home and perhaps repeat this process. Similar to a live-in flip process but renting it out afterwards instead.
Any input is appreciated!
Lance
Most Popular Reply
Yes!!! You can absolutely do that. Read Brandon Turner's story. You don't have to use flipping (selling) as your exit strategy. After 1 year, you should be able to refi the property. Be sure you're not overestimating what the ARV will be. But, it's a great strategy. If you're doing conventional financing, which I hope you are, try to use a smaller, local lender. That way, when you start getting past 4 units, you'll have a relationship that should allow you to morph directly into a portfolio model. Good luck!