I'm planning to get into my first investment property soon (in florida). I want to BRRRR. I just spoke to an experienced mortgage broker who said the BRRRR strategy isn't as easy as people think, because the banks will see what you paid for the property initially and will not easily lend you a new appraised value just a few months later.
Can anyone shed some light on this for me? Was this just a negative Nancy? Or do the banks really make it difficult if you paid significantly less for a property a few months prior to a good appraisal value?
Thanks very much!
Is that experienced broker an investor? There are numerous banks willing to take your money. If the property appraisal is good they should lend to you. If not shop around and find one that will. The bank doesn't really care what you paid for the property. They only care about the current value and your ability to make mortgage payments on time.
Hey Tony, if you are having trouble with conventional lending, you could look into private money, interest only payments. The BRRRR strategy is very much alive and strong!
@Martin Pacheco that’s what I thought. Thanks for positive confirmation!
@Jaron Walling thank you sir. That’s what I figured. Just gotta find the right deals and the right pieces. If it was easy, everyone would do it!
@Tony Gyra You can also try deferred financing but this only works if you can pay cash upfront for the purchase and rehab and have the closing agent include the rehab cost on the hud statement.
One of the challenges with this strategy can be the appraisal.
Providing documentation on the improvements made can help justify the increased value of the property.
One of the R’s is repair and fixing up the property which therefore increases value. Just ensure there are comps in the area to support the value. And as the previous poster said, I always had a list of repairs and upgrades done the property to present to the appraiser, and which the lender often asked for anyway.
This is savvy. Nice!￼