BRRR Method and Refinancing

4 Replies

I am interested in using the BRRR method in the future and had some questions on the refinance part. I am currently in escrow for a single family home that will be financed through a VA loan and want to buy another property in one year. I like the idea of the BRRR method but was wondering how hard the refinancing part would be for someone in my situation. I understand that all banks will have different requirements but since I am Active Duty and do not make a ton of money and I will have one mortgage already (If everything works out) will that be a red flag for the banks? If I can find a great deal do income and debt matter as much when I go to refinance?

@Branden Smith

DTI's are considered with VA and Conventional. VA loans are generous with DTI's and if you purchase a multifamily - Rental income is taken into consideration. With a VA loan and Conventional the home has to be in livable and working order. Some clients I have use the VA loan to instead purchase a four unit and then take out the maximum or close to it for financing, as they get the 100% financing with 4% sellers concessions and have very little out of pocket costs. The tenants pay most of, if not all of the mortgage and then you can build up equity faster - as long as the value doesn't depreciate, all with little to no money down. They do this to get the maximum possible rent as well. Obviously you would have to make a purchase that you are comfortable with the payments.

@Charlie Fitzgerald I am buying a SFH with my VA that I plan on living in for a couple of the years, renting it out, and then trying to buy another in a year.

@Jerry Padilla My original plan was too buy a 2-4 unit with my VA loan. Since I do not have 2 years of experience I could not find a place that would take the rental income into consideration.

Thanks for the responses!

@Branden Smith it can easily be done as primary conversion (turning your current primary into rental). I have done this for years. Be careful, though, FHA just changed the rules on doing primary conversions and could also effect VA, but I have not researched that. Shoot me a message, we'll connect, and I'll let you know the details of my previous experience.