Good day everyone.
Im in the process of finding a bank that would allow me to do a cashout refi. Now is there is correct terminology for Cashout refinancing when speaking with a bank? When I was speaking with the loan originator regarding my plans on purchasing the properties and explaining that I was doing the BRRRR strategy in order for me to take out 75-80 percent of the ARV, the loan originator seemed confused on my strategy because they thought I was taking avantage of them by taking money out. Instead I was offered a construction loan/203k. Am I not explaining it correctly to the bank? Should I not used the "cashout" refinance wording?
You can say cash-out refinance to your bank - it's an industry standard term. I wouldn't say "BRRRR" though, as they likely aren't familiar with that concept. If they ask why you're taking the money out just say you're using the proceeds to buy more rental properties.
@Raimel Diaz I would look for a different lender. I went through a lot of lousy lender contacts before I found one who really understood what I was trying to do. My lender helped me do a cash out refinance on my primary and gave me a contact for a great HELOC in second position. This allowed me to purchase my first four unit property in Lyons, IL. Seven months after the initial purchase of the four unit, I completed a cash out refinance on it and got back a large portion of my capital.
The "BRRR" strategy is certainly not a new strategy, but I wouldn't use that terminology with someone who isn't involved with BP as they will have no idea what that is. Just explain that you want to buy an asset that is undervalued, add value and then pull out as much capital as you can to re-invest. If the banker thinks this is sketchy then the banker most likely works only with primary home owners and should not be part of your team.
@James E. @John Warren . Thank you both your input. I didn't really use the wording "BRRRR" because I knew they wouldn't understand. Mainly try to explain the process I was using to acquire more properties, and how to expand. Yes maybe I need to find another lender who understands the process or have dealt more with investors.
Sounds like a good sign to find a different lender. Be happy their incompetence is shining brightly now, instead of 4 months down the road when you've committed to working with them
@Michael Ablan Thats completely true.
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