Updated over 2 years ago on . Most recent reply
Real estate investing
Can someone explain the Refinance part of the BRRR method? Along with house hacking tips for kitchen and bathroom?
Most Popular Reply
The refinance portion of the strategy is the part where investors are able to receive back a portion (hopefully all) of their invested capital, and possibly a portion of the value they have created.
For example; you purchase a home for $50k, invest $25k to renovate it, and then rent it out. After the seasoning period (6+ months), you speak to a lender, and hopefully, the property has increased to at least $100k, so you are able to refinance with long-term, fixed debt at a 75%-80% LTV; allowing you to pay back yourself, and any HML who lent you funds.
You now own an asset, that cashflows (hopefully), your net worth has increased by $25k and you are able to do it again.