Updated over 6 years ago on . Most recent reply
Commercial loan BRRRR strategy?
I have been buying beach multifamily properties, doing small renovations, and operating them as Short Term Rentals. We’re crushing it, and are continuing to scale. I’m using arbitrage to continue to build a portfolio when limited by buying power, but I have an idea and I need some information. We have access to hard money at 8%, interest only for 5-7 years. The triplex we’re currently operating appraised for 450k, and we will do over 105k in gross rents this year.
Let's use that as an example. If I locate another property like that, and I am purchase it with cash, and then turn it into an operating short term rental property with strong cash flow. Is there a way that I can refinance into a commercial loan without a long seasoning period? I have access to data that gives a very accurate forecast of gross rents and cash flow. Do you think I would be able to find a local commercial lender that would be willing to refinance the property into a commercial loan? The idea is that if I can get a commercial appraisal to not only appraise the building, but the cash flow, I might be able to get a higher appraisal, and pull all or almost all of my hard money cash back out, with the debt being secured by the income generated by the property instead of my personal borrowing power. Basically a BRRRR for STR. I've got several meetings set up with local commercial lenders. Any thoughts?