Questions about the BRRRR method

[Brian Harenberg]

I have been listening to the podcasts and learned about the BRRRR method. It makes sense and I get it but I had a clarification question. When you Refinance, I'm assuming that is a cash out refinance. Is that correct? Are there greater restrictions on a cash out refinance? Can you go to 80% LTV on a cash out refinance on an investment property? Thanks for the help! Brian

[John Leavelle]

Howdy @Brian Harenberg

Most BRRRR strategy investors are looking to get all their initial Cash investment out using the Cash-Out Refinance loan. However, that is not the only method. You can also use a Rate/Term Refinance loan if you plan correctly and do not have much of your own cash in the deal. For the most part the Cash-out Refi is what most use.

Lenders will use 70 - 80% LTV. As others have said it is typically 75%. Small local banks and credit unions may sometimes provide 80%. I always use 70% in my calculations to stay conservative.

I strongly recommend you get prequalified for the Refinance loan prior to purchasing a property.  It makes the whole process a lot easier and less stressful.