I am a newer investor in NOVA (northern VA) looking to utilize the BRRRR method to grow my rental portfolio. I intend on using private money to purchase the property, but as a new small business owner (8 months in), any banks will ask for 2 years of tax returns in order for you to refinance. I cannot get a REFI or HELOC on any of my current properties due to this issue. How will I be able to get a REFI for my BRRRR property? Is Commercial lending my way? Is it different with banks if I purchase it under an LLC?
@Joonsik Park you may have to go the stated income or no income type loan, or maybe a non-recourse loan. They're out there but you pay for them. Probably looking at 7% - 8% interest, so.make sure you are factoring in that additional cost 8n your analysis
You would have to go with a cashflow program - that only looks at the cashflow of the property and not your income. If you have great credit, rates may be slightly less than mentioned above.
@Jason D. Thank you for that insight... definitely will need to factor the 7%! I appreciate it!
@Jerry Padilla Do I simply ask the banks for the cashflow program? or do specific lenders do this? Thanks for the reply and insight!
@Joonsik Park Commercial lending comes in handy during the BRRRR strategy for many reasons. Like @Jason D. pointed out, these programs will qualify you without tax returns and base the loan on your FICO + the property's cash flow. However, 7%-8% is certainly on the high end. Depending on a variety of factors you can still get this type of thing in the 5% and 6% range.
@Alex Bekeza Thank you for the response! Thanks for your insight!!
Only some portfolio lenders do this. Yes, it is called a Cash Flow program and the property would have to be rented.