Aiea, HI · Member since 2016 · 44 posts · 10 votes
Hi BP Community!
I am an owner of 4 out of state investment properties. All acquired through conventional loans (20% down) and currently rented with a decent return (10% -/+). If wanting to incorporate the BRRRR method, would I essentially begin @ finding a lender for refinancing? It seems that you'd want to start with a purchase of a fixer-upper first, but what about properties purchased through 30 year conventional loans? Is it wise to refinance an already long-term mortgage (30yrs). How would that look and would that affect my current cash flow? It would only make sense to me if I could get close to all the money that I put down for all 4 properties. Thank you for your time in advance!
Investor · Shakopee, MN · Member since 2014 · 219 posts · 88 votes
9y
Hi,
Depending on when you bought the property, and any possible appreciation that may have occurred, do you have an ability to refinance any of the existing properties to pull cash out?
The idea is to refinance the house now that you fixed it up to pull the cash out. Example: Buy a house for $200k. Fix it for $30k. Now it's worth $300k.
You put down 20% (40k) and had a balance of $160k mortgage when you bought it. But now you can refi at 80% LTV and. $300,000 * 0.80 = $240,000. Refinance to pull out $240,000. Pay off the old loan of $160k --- Likely closer to $150,000 now. Use the newly borrowed difference of $90,000 to buy your next house for cash (or to use as a down payment on the next one).
The next step is getting the cash out of your house for your next purchase.
Aiea, HI · Member since 2016 · 44 posts · 10 votes
9y
Dan D. Thank you for your response! Sorry for the delayed reply. I've had some time to look into it more and now starting to understand it a little better.
I've recently purchased the properties (Ohio) about 6 months ago with little to no rehab done as they were purchased move-in ready to quickly fill with renters. This makes me believe there is little appreciation or equity built to pull out. Would it be a better option to refinance all 4 properties into one loan through a portfolio lender?
I'm moving back to Hawaii and want to purchase another income property there as well as repeat after. I would be able to couple whatever I can pull out with another 50k. Thanks in advance!
Aloha 🤙🏽
Investor · Shakopee, MN · Member since 2014 · 219 posts · 88 votes
9y
Whether purchased with four different loans or with one loan across all properties, the loan to value measurement will be a key factor in whether you can take money out.
In your case, if you bought in a market that appreciated, you may have more value now than when you purchased, but probably unlikely. But as always, talk to banks and other lenders for options. No one on a forum can answer questions that the lender can answer specific to your situation.
Send us pictures of the property you buy in Hawaii, and let me know when I can bring the kids out for a free week!