can i consider my condo as a BRRRR?

[Account Closed]

hello BP realm, I purchased my condo for 180k and I put 9k down. my condo is rent ready as is with minus a painting. If I plan on making 10k in improvements over the next 6 - 12 months and say after those improvements are done my condo appraises at 200k and I were to refinance for that amount, I would then get a cash out of 29k minus the 10k for the improvements and I would have 19k to work with? my questions are, am I grasping the BRRRR concept right and how long do I have to wait to refinance? I do plan on renting this place hopefully in the next year. regards, Stephen

[Andrew Syrios]

Do you mean if your condo appraises for $250,000 and you can borrow $200,000? Banks are only going to lend you 75-80% of the appraised value. Homeowner loans might go as high as 95%, but I believe it's tougher to refinance with them. The idea behind BRRRR is basically to buy a property you have enough equity to flip, but instead of selling it, you refinance it and pull out all the cash you put in. But if the property is only worth $200,000, you don't have enough of an equity cushion for a BRRRR. This sort of falls more into house hacking, where you buy a property, fix it up while living in it, then eventually move out and rent it out.

On one other note, be careful when holding condos. They can work, but often times the HOA kills your cash flow.