How do you find the refinance numbers in a BRRRR strategy?

Question

Hello BP family! I been crunching numbers on a potential BRRRR strategy for a SFM. I am stuck on how would I found out what the refinance numbers would be in the refinance step of BRRRR.  The potential deal is buy for $100k. Rehab cost is $50k. ARV in that area is $230k conservatively. Rents are going $1400-1700 in same neighborhood. How would I know refinance numbers after rents. Any advice and feedback would be highly appreciated ! Thank you BP Family!

Nicholas L. · Answer

@Marcos Cardenas

if you want details on a potential loan, just call a broker.  but you should be able to run the numbers yourself.  just use a mortgage calculator and the actual costs for taxes and insurance, etc.

the rent is irrelevant... the refinance will be based on the ARV.

Alfath Ahmed · Answer

This is very simple. You can also plug into chatgpt and they can make an entire outline. I'd plug your prompt in.

Purchase: $100k

Rehab: $50k

ARV: $230k

You are buying the deal at a great value already (assuming your ARV is correct and rehab budget is actually $50k, it always goes overbudget btw).

$230,0000 *0.70 = $161,000 *0.985 = $158,585 (The bank will give you this value, subtract closing costs 2.5% from here for closing costs). I am assuming 70/30 from the bank.

True refinance value $158,585 - $100,000 - $50,000 - ($100k * 0.025 = $2,500) = $6,085

You should be able to pull cash out of the deal if your numbers are correct.

Bill B. · Answer

You buy for $100k, add $50k, if the bank agrees the ARV is $230k they’ll probably refinance you at 75% or $172,500. You win, you have an extra $22k in your pocket. If you want more cash flow you simply refinance for only $150k.

You already know the insurance and property taxes as you’re already paying them before the refinance. The rest of the payment = is determined by interest rate, mortgage amount and length of loan.

Marcos Cardenas · Answer

@Alfath Ahmed hello Alfath! Thank you for the kind feedback ! I will go over my numbers again especially budgeting for renovations. And thanks for the tip on ChatGPT ! Do you recommend also getting some refinance numbers from a few different lenders ? Thank you!

Marcos Cardenas · Answer

@Bill B. Hello Bill, thanks for the kind feedback ! Does the bank inspect the property to find the ARV? Thank you!

Marcos Cardenas · Answer

@Nicholas L. Hello Nicholas thank you for the feedback ! Okay thank you very much. I will use the ARV and mortgage calculator.

How do you find the refinance numbers in a BRRRR strategy?

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