Rental Property Investor · Crown Point, IN · Member since 2018 · 53 posts · 17 votes
Is it possible and/or make sense to BRRRR a property by getting a loan up front instead of cash for the whole thing?
example: Buy with a loan, Rehab, Rent, Refi (Cash out ReFi), Repeat??
Curious because this opens up some higher level homes that could likely not pay for with cash up front. This would also reduce your cash outlay from the beginning...
Has anyone done this or does it become too complicated?
Lots of folks buy with hard money so they get the acquisition and renovation money in one shot and then refinance into a longer term loan once the property is stabilized.
Rental Property Investor · Crown Point, IN · Member since 2018 · 53 posts · 17 votes
7y
Thanks @Stephanie P. Im very familiar with that method and have seen plenty on that but recently saw a different angle with getting traditional financing and then doing a cash out refi after seasoning period. Im meeting with my lender Monday so will follow up with his thoughts.
Rental Property Investor · Metro Detroit, MI · Member since 2016 · 277 posts · 269 votes
7y
Yes. My very first deal I bought with 5% down conventional loan with the intention of it being a future rental. At first, I didn't know I needed to pay all cash for a BRRRR so I did it this way.
Purchase Price - 57k
Rehab - 15k
After 6 months I had an Appraisal to remove the PMI, it came back at 115k. I removed the PMI and instead of refinancing I just did a HELOC since it was still considered my primary residence. I could have refinanced for a slightly lower interest rate, but the downside to that is paying another set of closing costs and an immediate higher monthly mortgage payment. The HELOC cost virtually nothing and I wasn't rushed to go find another deal right away.
Thanks @Stephanie P. Im very familiar with that method and have seen plenty on that but recently saw a different angle with getting traditional financing and then doing a cash out refi after seasoning period. Im meeting with my lender Monday so will follow up with his thoughts.