What no one talks about with BRRRs!

Question

So I’m learning quick with the brrrr strategy that no one seems to talk openly about the 6 month waiting period on a brrrr before you do the cash out refi.

If you buy with a mortgage, you have to be on the title for 6 months before you can refi.

If you buy with cash you have to wait as well.

Everyone talks about brrrrs being a great “quick” strategy, NO ONE talks about all the waiting around.

Are you renting and then letting your tenant live there for months before refinancing? What if they blow the appraisal for you?

John Teachout · Answer

I don't think the waiting period that most lenders require is a secret. I've seen it discussed on these forums a multitude of times. There's also a waiting period if you want the property's income to be considered.

If there's a refurb involved that's going to take some time and I think most people's strategy is to get it rented out. You don't have to have it refinanced to rent the property. It's a sound plan but much more difficult now that prices have risen back to near pre-crash levels.

Martin Neal · Answer

@Vincent Plant I’m currently working with a lender that does not require a six month seasoning period. You may want to shop around for lenders. Also Alexander Felice wrote an article about the Delayed Financing Program in which you can refinance sooner as well.

https://www.biggerpockets.com/blog/work-with-lenders-brrrr-method

Whitney Hutten · Answer

@Vincent Plant Your waiting period depends on the LTV, loan type, and the lender itself.  You can do rate and term refinances immediately.  Cash out refi's may take up to 6 months.  Here's a guide to help you navigate the BRRRR financing process that covers all how to work with seasoning periods.

Bryan Devitt · Answer

If you put a tenant into your property that can blow your appraisal within 5 months of moving in (which would be very tough) then the least of your issues in the future as a real estate professional will be getting that refi done. You say no one talks about it but literally everyone talks about it, just not for long because it is a non-issue to most. You either deal with the 6 month season or get around it.

Kenneth Garrett · Answer

@Vincent Plant

The 6 month seasoning is common knowledge and there are a number of posts discussing the  seasoning period.  Why would you wait to rent it. The strategy is to rent it asap.  Start generating the revenue.  If you are held up and it’s costing you money, there’s always commercial loans no seasoning, but higher rates and you have own it in an entity.  There are choices available.

Brandon Cooper · Answer

@Vincent Plant i dont have to wait for the seasoning period. Call around and talk with local banks and CUs. I was expecting to wait but got lucky. Everyone knows about the seasoning period though. Its not like its not talked about

Account Closed · Answer

@Vincent Plant

Not all lenders have seasoning requirements. Shop around. Use a commercial loan. Heck, I once completed the entire BRRRR cycle in under 60 days.

Steve Vaughan · Answer

It should be the BRRSRR strategy, for Seasoning but that's not as cute.  Matter a fact, fees should be in there too.  Maybe the BRRSF($3000+)RR  strategy.. LOL

They should discuss seasoning and costs more as sure as this post should be in the BRRSRR forums Your thinking it's quick (and painless?) shows it's misadvertised. Glad you are bringing it up Vincent. Somebody may get pre-informed.

Evan Polaski · Answer

@Vincent Plant 6 months is short, I had to wait 12 before any bank I spoke with would lend on new appraised value.

But this is one of many reasons real estate is a relationship business.  First 2 with my bank had to wait 12 months, then magically that requirement was dropped on subsequent mortgages.  These were also commercial (balance sheet) loans not agency, so bank had more flexibility.

But as mentioned, if you are not going for agency (fannie mae, freddie mac) loans, the lender has a lot more flexibility because they are lending their own money.  Build a relationship with a few banks, and magically underwriting starts to dwindle as they become more comfortable with you.

Joe Villeneuve · Answer

Not everyone does

What no one talks about with BRRRs!

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