How Fast Can You Refinance?

Question

I've been recently reading two BP books and they touch on BRRRR from time to time (Also the podcasts I've listened to). My question is, can you Refinance before Renting? Has anyone ever put their own spin on BRRRR strategies and were successful?

Chris Levarek · Answer

Thanks @Landon Moore for shout out. @Brandon C. Typically this is not a good idea to refinance before renting.

A) you will have no income for the "seasoning period" which as @Tommy Adeoye mentioned can be 6 months or greater. So if you borrowed, partnered, or purchased using creative financing, hml, private loans, etc., you might have debts to pay during those 6 months with 0 income.

B) Banks like to see cashflowing assets, even on the residential side. It gives a warm fuzzy feeling to lenders and you will get a easier refinance potentially. Additionally, a lease showing rents can be beneficial in an appraisal. Mostly on the commercial or multifamily side however, this is key for upping the value of property for a better appraisal.

There are a few variations to the BRRRR such as lease-option rent instead of just rent and the delayed financing approach, skipping the seasoning period of 6 months. Find the one that works for you, build the team to support it and execute.

Landon Moore · Answer

@Brandon C.Great question and there is a strategy that is employed by seasoned BRRRR'rs haha. Called Delayed Financing.Check out @Chris Levarek website discussing the stategy at https://www.valkeregroup.com/blog/delayed-financingHe give a great explanation of how to employee it. Additionally check out the BP Podcast 301 with @Alexander Felice where he discusses how quick he can process a BRRRR. This would be a great start.

Tommy Adeoye · Answer

@Brandon C.

Depending on the scenario, there is no one size fit all answer to the question as they are too many variables to consider, some of which may include the agreed term with your current lender, amount of equity you may have in the deal and your future lender.

However, most cases I have read about on Bigger pockets have been 6 months. I also spoke to a private money lender that says 6-8 months. I believe it also referred to as the "seasoning" period which means the accumulated amount of time from the date on your title.

One other factor that will be put into consideration is your niche and/or strategy, some may just go with 90 day seasoning .  Asset driven lenders for instance may not even care so long as you meet their credit requirement after they may have underwritten the asset .

Without a broad insight of the deal, it is difficult to say tentatively. If I have to give a range I'll say between 3 months - 12 months. Overall, getting creative financing is a contact sports. If you speak to multiple lenders you never what you might get. Ultimately, the key is make sure you BRRRR right.

Good luck!

How Fast Can You Refinance?

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