When do you refinance after a BRRRR

7 Replies

Hello All, 

I would like to BRRRR a few SFH's. After further research, I have been told by more than one lender that you have to wait one year to refinance the property to get the initial cash out. This explanation for this was that the house can not be reappraised at a higher value related to purchase price, for one year. Any experience with this and does anyone know of a way to refinance to get the initial cash investment out before one year?

Thanks in advance for your comments and suggestions!

Kera - RN, fulltime mom and newbie investor

That is how the strategy works, but keep in mind that the refinance is one year after purchase not after the rehab is complete.  You can go with hard money to acquire and rehab the property but that can be more risky and costly than just waiting for the ability to refinance.

Some lenders will do it at 6 months. Try community banks or credit unions. If you are looking at commercial products it can be a lot faster.

I was talking with my commercial lender today about a cash out refi for a duplex and he’d do it in 90 days, assuming rehab compete and building tenanted. And that’s 75% new appraisal, or 80% if you take a rate bump.

Downside is you are looking at a 10 yr term on a 20 or 25 amort and a rate of 5-6%.

You are looking for a no-seasoning or 6 month seasoning loan product, just so you know what terms to search for.  

6 months seasoning is fairly standard. That's 6 months close-to-close so you can start underwriting a bit early and overlap. you can also use delayed financing to pull 100% of funds out, but no more and it removes the seasoning requirement. This is what I recommend.

I just flipped a BRRRR in 9 weeks from house close to loan close.

I would say you should refinance as soon as you can. Different lenders have different requirements regarding seasoning (how long you have to own a property before they'll refinance at appraised value versus what you have in the property). I would recommend talking to a few more banks. And if the best you can find is the 1 year minimum, then unfortunately, you will have to settle for that. But we've found banks that will do it as soon as the property is rehabbed and rented.