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Private Lending & Conventional Mortgage Advice

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Mikael Winkler
  • Rental Property Investor
  • Columbus, OH
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344
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Refinance After Purchase and Renovation?

Mikael Winkler
  • Rental Property Investor
  • Columbus, OH
Posted Feb 15 2018, 18:52

Hello all,

I have a question regarding refinancing. More specifically, how quickly can you refinance after a purchase if you add value through a rehab? I've seen from many sources that lenders generally don't want to refinance prior to 6 months after because not enough equity has been built up. Maybe I'm thinking too simply about it, but if I'm forcing an equity increase through a renovation, why couldn't I reappraise and refinance immediately after that renovation? Whether that's 3 weeks, or whenever, after the purchase.

I know @Brandon Turner loves the BRRRR strategy and I do, as well. That's how I completed my first rental renovation. But, I also lived in my first property during the renovation so waiting to refi wasn't a huge deal. My next would be non-owner occupant. Unless I'm missing something, having to wait to refinance, would effectively wipe out much of the profit until that 6 month mark, as I'd also be making payments on the funds borrowed to do the renovation. Is the BRRRR strategy assuming that the investor isn't using borrowed money for the rehab and can wait a period of time before refinancing?

Thanks all!

Mikael Winkler

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