Interest Rates Question in Finance/Refinance - BRRRR Strategy

Buying & Selling Real Estate
6yFollow

Interest Rates Question in Finance/Refinance - BRRRR Strategy

Angel G.Pro Member
Moderator
Rental Property Investor · Colorado Springs, CO · Member since 2016 · 61 posts · 37 votes

Happy Holidays everyone! I have a quick question in hopes that you all can clarify something for me regarding conventional loans / refinancing and interest rates in the BRRRR strategy.

I'm under contract for a MFH which I'll be using a 30-year fixed conventional loan with 25% down. While researching several lenders and comparing rates, I thought to myself "...if I'm refinancing this property upon completion of its seasoning period..should I be as aggressive on finding a low interest rate on the initial loan?"

My concern is that I'll find a great rate on the initial loan which will either be hard to match or beat with a refinance loan. Am I off on my thinking here? Also do you all finance / refinance with the same lender?

This is my first venture outside of using my VA loan (just closed on my second SFH using remainder of entitlement) so any insight is greatly appreciated!

1Reply
8 views

3 Replies

Jump to latestLatest
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    6y

    @Angel G. you are on the right track with this line of reasoning. I would not stress much at all about the initial interest rate if you are planning to refinance in the first year. In fact, I would focus more on how little you can bring to the closing table in fees and closing costs. 

    As to your second question, I have found in my investing career that once you find the right lending partner it generally doesn't make sense to change unless you have moved out of their area of expertise (for instance moving from residential to commercial like I did). My lender helped me get started when I completed a BRRR here in the Chicago suburbs, and he has done seven loans for me. It would have been incredibly hard and frustrating to go through the process over and over of finding a new lender each time just so I could potentially save a few dollars here or there, and in addition I would have lost all of the mentoring I got from him. If I were in your shoes, I would focus on finding a lender who is able to help you grow your business and then I would stick with that lender.

    1Reply
  • Angel G.Pro Member
    Moderator
    OP
    Rental Property Investor · Colorado Springs, CO · Member since 2016 · 61 posts · 37 votes
    6y

    Thanks @John Warren for taking the time in providing me some great insight!  

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Find a good lender, and use them over and over and over again. Good lenders will have good rates, but maybe not the absolute best rate every time.

    When you chase rate, you chase problems. No headaches is worth an eighth of a point.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    2Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free