Updated over 8 years ago on . Most recent reply
Bank Construction Loans for BRRRR
Hello BP,
Has anyone used a bank for a mortgage loan and a construction loan? I am about to close on a property, doing a BRRRR strategy, and I'd like to know some people's experiences with it.
How mine is working...
-At Closing, I will get a loan for the cost of the purchase and the cost of rehab, the latter remaining at the bank. This is a 6 Mo loan with a balloon payment of the full amount.
-My Contractor and I have written up a Draw Schedule of 4 payments that he will receive from the bank throughout the rehab process. Rehab is 4-5 weeks estimated. <-should I have been my own general contractor to receive the money myself to pay the contractor?
-Once the rehab is done it will get re-appraised and refinanced into the end loan (Mortgage loan) which is a 30 yr fixed rate.
If all goes well, it'll be a very good little deal for us, if some things turn a bit, it'll still be worth it :)
What are your thoughts? Experiences?
Joe