can you call this a BRRRR ?

Question

I'm a little new to this but, ..to be considered a BRRR,do you have to buy with cash or can you still benefit from the principles by taking out a mortgage?  I just bought a foreclose SFR and after rehab, I'll be at about 60% ARV. I could have paid all cash but at $490K, it would have emptied me out pretty well so I put down 30%/ 30yr/3.75%  I'm going to live in it while I rehab it, and rent my main house out to cover the mortgage on the BRRRR house. Can i not still refinance after 6mo- 1yr and pull out equity to use on another BRRRR ? or , did I kind of pingeon hole myself to where my only option would be to sell it to recoup the forced equity and market equity that I have created..buying it and rehabing it at a cost of $95/sq ft and selling it for $188-210/sq ft puts a potential $300K  on the table in profit.  Thanks !

Kiersten Vogt · Answer

If you're only at 60% after purchase and rehab and you're living it, you could most likely refinance for somewhere between 75-85% of the appraised value since you're an owner occupant. So you'll be able to take 15-25% equity out of the house. That's exactly what we did!

Guifre Mora · Answer

Yes, it's a BRRR. Can I not still refinance after 6mo- 1yr and pull out equity to use on another BRRRR? Yes, you can.

You are doing it well. Renting your home to pay for the mortgage is excellent. Be mindful that rates may not be the same and this is something you are going to have to live with when you cross this road.

Good luck Keep BRRRR!

Terry Ouimet · Answer

OK thank you for the great feedback, I'd like to live in it 2yrs to avoid capital gains in case I do sell it, plus my wife will kill me if I move us again soon..maybe I'll rent the whole house out in a couple yrs.., and it has a separate mother in law/studio with kitchen, laundry & garage that will rent for $500-700/ mo while I rehab it.. much appreciated,