I just completed my first BRRRR project, getting the long term financing in place this week. Details of the project are below:

Properties: 2 duplexes, side by side in Tacoma, WA
Acquisition Date:  3/31/17
Acquisition price: $340,000
Rehab costs: $85,000
Appraised Value: $640,000

Original Financed Amount 1st lender: $315,000
Original Financed Amount 2nd position lender: $110,000

Cash-out refi amount @ new appraised valuation: $456,000

The rehab work on the project was completed at the beginning of August, but the refinancing proved to be the most challenging part of this project, and wasn't completed until now (early December)!

Here were some of the challenges that I ran into:

• Lender said they could originally do a conventional 30-year @ a 75% LTV. I have a W2 job, but also own a business which had significant losses in 2014, 2015 which offset a lot of my income. After going to underwriting, they said they couldn't lend based on my numbers, and would need to wait until I filed my 2016 return (I had filed an extension). 2016 return came back mid-october. They said numbers were good enough.
• After going through underwriting, I'm told title will need to be in my personal name (currently title was in LLC name). I was expecting this though, but not expecting to get a call a few days later saying that Fannie/Freddie rules say title must be in my personal name for AT LEAST 6 months prior. So after all that, conventional lending was out.
• Called a dozen different asset based lenders getting quotes.  What I learned about asset based lenders.
  • Great if you don't have W2 income or don't want or can't get a conventional loan, and just use the income of the property to qualify.
  • Rates will be at least 1.5% higher than conventional
  • There will be prepayment penalties within the first 3-5 years.
  • Origination fees will be higher than a bank or credit union.
  • Some could lend as high as 80% LTV.

• Called about 10 community banks and credit unions in the area, and found a few that were interested in lending on the project.  What I learned was:
  • More flexible than conventional lenders.
  • Rates were higher than conventional, but lower than asset based lenders.
  • Origination fees were inline with conventional lenders.
  • LTV ratios were anywhere from 65%-75%
  • Title can be held by an LLC

I ended up going with a credit union due to the lower rates, origination costs and no prepayment penalties.  I was able to get all my capital back (and then a bit more), and the property still cashflows at about $800/month (Pics Below)

And now am looking for my next project.