Nervous about the Refinance step of BRRRR

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Nervous about the Refinance step of BRRRR

Levi Benton
Member since 2018 · 13 posts · 3 votes

Hello everyone! 

I am looking to pull the trigger on my first deal which I plan to BRRR but I am scared about the refinance. It is a duplex in downtown Cincinnati ($60K Asking / $30K Rehab). My comps are a bit weird and they are freaking me out and making me hesitate. I am trying to pull an ARV but the only evidence I can pull in the small pocket of downtown is a home selling 2 doors down for $165K. Nothing else has sold in the 2 block area but around the corner homes are being turned at $500K. Also a few other properties in the area are listed but low activity. Not looking to sell, just refinance and hold.

Should I bail because the activity? 

Can I guarantee my refinance value with my lender before the offer? 

Is it good to be the first in an area that is in the middle of a community (Cincinnati OTR) turning around with high rents. 

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Matt P.
Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
7y

@Levi Benton if the expensive comps you mention are duplexes you should be ok. If they are single family the appraiser will not be able to use them in my experience. What I have had happen is they go back longer than 6 months or expand their search area slightly to find comps. Could hurt you could help you. My experience has been with going through a few BRRRR on small multi families here in Ohio. Good luck.

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  • Matt P.
    Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
    7y

    @Levi Benton if the expensive comps you mention are duplexes you should be ok. If they are single family the appraiser will not be able to use them in my experience. What I have had happen is they go back longer than 6 months or expand their search area slightly to find comps. Could hurt you could help you. My experience has been with going through a few BRRRR on small multi families here in Ohio. Good luck.

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  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    7y

    If your only hesitation is the ARV, then you could work with an appraiser to get an "official" opinion. If you have a bank in mind for the refi, you could even use the same appraiser that they use. This is what the lender will base your LTV on.

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  • Kevin May
    Rental Property Investor · Lawrenceburg, IN · Member since 2016 · 31 posts · 6 votes
    7y

    @Levi Benton if you are finding something for 60k and only 30k rehab in otr I would be very hesitant. Something doesn’t look or sound correct. Are you finding comps on same street? Are you familiar with area? If you want DM me address and I’ll look at more comps in mls and see if I can help you. I’m no expert in otr but in that area prices are higher for buildings falling down unless it is in the bad/wrong area. Thanks kevin

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