Refinancing on a BRRRR property

6 Replies

I am 18 years old and am looking at buying my first investment property this summer. I am looking at doing the BRRRR method. I have the private money lender and the general contractor handled, but due to me being 18, I

had concerns with the refinance portion. My father has over an 800 credit score, and he said he will sign on as a 1% equity holder with me during the refinance. I went and spoke with a lender yesterday, and I was told that I would not have a problem refinancing as long as my father signed on with me. He said that the credit portion of it was covered, but I could have a problem with the income side of approval. He said to prevent this, I would have the option of them looking only at my rent appraisal on the property, and if it covered my mortgage and expenses, basically making sure it cash flows, (which it would because it all comes in the due diligence of the analysis) that they could bypass the income aspect of approval as well. In return for this, I would be on more of a 7 or 8% interest rate. What are your thoughts on this, do I have other options, etc.? Thank you!

If the property still cash flows at a 7 or 8% interest rate, and it's the only way you can find to acquire it, then I'd say go for it. It's worth it to get your feet wet. You should talk to the bank about whether, with your dad as a co-signer, you can use his income to help qualify and reduce the interest rate. You can also always refinance a couple years down the line into (hopefully) a lower interest rate, once you have the income to support doing so.

Considering your 18, it may be that you haven't been on the job for 2 years or more, therefore needing your dads income and hopefully low debt ratio, to help you debt ratio on the loan. If that's the case, why wouldn't you just get a Fannie Mae or Freddie mac loan that should be 3-4% lower than what you were quoted? Something doesn't sound right to me on this one. I would have the lender fully explain why you cant get that loan. If you disagree, seek out a different lender?

@Kevin Romines Thank you for your advice. This lender is a family friend that owns a mortgage company. He mentioned this as an option but never stated that it was my only option. I am speaking with him again tomorrow. I am still going to shop around for loans before I refinanced, I just wanted to get an idea of what I would have available.

@Jeremy Rhodes thank you! Started falling in love with the different aspects of real estate about a year ago. I planned to house hack once I turned 20 and had 2 years of documented income, but after I started learning more about the BRRRR strategy, I thought why wait!