BRRRR Financing

[Ramin Y.]

For the past few years I've been educating myself with my options as a potential investor. 

Today my goal is to start as a BRRRR investor and master this one niche before trying other options.

I would like to hear from experienced investors in this category. 

• What are the main challenges of the initial funding process?
• What criteria do you look for in a hard money/private money lender (Rates, Timing, Etc.) ?
• How do you approach the hard money lender to gain his trust ? 

And of course, any other advice given is highly appreciated!

[Albert Bui]

Originally posted by @Chris Low:

@Ramin Y. - something you might consider in your research is the question I see asked most frequently about the BRRRR strategy: where to find a lender who will do the ARV refinance to get your cash back out in less than 6 months? For us, this is the most important question in the BRRR analysis. Being able to refi in 12 months seems pretty common from conventional lenders, but less than 6 months is the big hurdle. Although the properties we're looking at for flips could potentially be BRRRR candidates, we haven't gone in expecting to do a BRRRR for this very reason. We want to make sure we can get that refi on our timeline so our cash isn't tied up for so long. Until we find it, we're focusing on flips.

 HI Chris,

Any fannie mae lender which is probably almost all residential lenders in the country can deliver or do a refinance within 6 months of a BRRRR strategy if you:

- are doing a rate and term (regular refinance AKA non cash out refinance) there only needs to be 1 day on loan and title to do this

- bought all cash (property has no lien on it) and property is free and clear you can cash out refinance up to 70 % of ARV or your acquisition cost, whichever is lower. If you bought right your acquisition cost will be the max meaning you've created a lot of new exquity. The down side is the definition of "acquisition cost," does not include your rehab money. If you want to cash out your down payment and your rehab then you have to wait 6 months min. Both of these refinances above utilize ARV value there are certain nuances and restrictions to the ARV.

The second option is often referred to as delayed financing exception or DFE. Its nothing new.

There are ways to get back your rehab money and your original down payment/proceeds, but it involves mixing creative investing techniques with traditional and structuring the loan to meet guidelines so you can get all your money back within 6 months.