Completed my first BRRR -- worked like a charm

33 Replies

I purchased a townhouse in December 2015 and completed a BRRR on it yesterday. Well, I didn't actually rehab it, just found a good undervalued property and raised the rental to what is still below market (I didn't want to kill the tenants in the first year).

Numbers looked like this:
Purchased for $71k cash; raised rent to $1,000 from $830 in July 2016; minimal repairs; appraised for $110k; cash out refinance for $82k; payment $515 incl escrow; will raise rent to just below market to $1,150 at renewal.

Atlanta, Marietta, Kennesaw, Georgia

The acronym has FIVE letters (BRRRR). You haven't completed it until the last "R" = Repeat.

Many Lenders only lend 70% of their appraisal (which still would have worked). Congrats... 

@Sonny H.  I am sorry I misunderstood.  I purchased cash and I am now at 4.5% over 30 years.  Payment is now $515.

@Jorge Borjas To be honest, I was buying and searching for a bank.  I talked to many lenders and yes, most said 6 mos seasoning.  I spent some time looking for the best deal and oscillating between conventional and private money (only because private money didn't require the same seasoning).  So yes, the process was a little slower but now that I have the bank, I will apply on Dec 1 for the property I purchased on June 1.

Now cashed out 82k, will you buy another house for that amount and cash out on the 2nd property, lets say the property value is $110k. Which now you have two properties, 2 loans you owe close to $164k  or you use the cash out to pay off the 2nd property so you can get more cash flow? 

Originally posted by @Kalimah Jenkins :

Brent Coombs I left off the last R because I'm one month away from repeating due to seasoning requirement.

That only makes sense to me if they've only lent you $82k "in principle" - but not actually?

Next time, perhaps use the "Delayed Financing Exception", WITHIN six months? 

ie. Just apply for your full cash purchase price back - not extra? Cheers...

Originally posted by @Kalimah Jenkins :

@Brent Coombs I am not quite sure what you mean. I didn't ask for more. I refinanced out 82,500 which was 75% LTV. I rolled the closing costs and received $79,800. I'm learning so explain what I could've done differently.

If you "RECEIVED $79,800", what's the hold up for your "Repeat"? Why mention "seasoning"?...

@Brent Coombs Now I'm confused. Perhaps I don't understand "repeat". I thought it meant do it over again. Use that money to buy another. I mentioned seasoning because besides the one I just did, my next property is up to be refinanced in 4 weeks. I have owned it for 5 months. Am I incorrect in that? If so, what does the repeat stand for then?

Originally posted by @Kalimah Jenkins :

Brent Coombs Now I'm confused. Perhaps I don't understand "repeat". I thought it meant do it over again. Use that money to buy another. I mentioned seasoning because besides the one I just did, my next property is up to be refinanced in 4 weeks. I have owned it for 5 months. Am I incorrect in that? If so, what does the repeat stand for then?

Do you mean your "next property" was the one you bought with that same $79,800 loan?

That's what I mean by "Repeat", in which case, you could have mentioned it from the outset!

ie. TWO $70k+ properties bought with just ONE $71k of your own cash injection! Cheers...

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