I haven't seen this angle with the BRRR method, so I thought I'd ask it.
Let's say I use 50k of a HELOC to purchase and rehab a duplex. I think the HELOC is great, low risk, low interest rate, interest only payments, I already have it in place, etc. I want to do the traditional cash out refinance after being on title 6 months. (Very much a normal BRRR).
Now let's say that in 3 months I've purchased the property, rehabbed it, and have placed tenants. Great! Expect I have to wait 3 months to get a conventional loan, get my money back, and do it all over again. This got me to thinking, instead of using a hard money lender to finance all the risky stuff, does anyone or any entity offer short term, low risk loans? Once the building is rehabbed and tenants placed, this shouldn't be nearly as risky as financing the whole process.
Basically, I'm curious once I'm just waiting, if I can finance 100% of the amount I have in, pay off my HELOC, and start another BRRR while waiting to be on title 6 months? I realize I'd likely have to pay for an appraisal; ideally after that I'd just pay interest and principal and avoid points.
I assume this IS a possibility, just curious if anyone has a recommendation on the best source for such a loan.
Sounds like a good idea and I think you could probably try to get a bridge loan.
The problem I suspect you might have is that the cost of that type loan is closer to what you get with a HML.
So while you might be able to recyle your money very quickly, I am not sure that all the transaction costs you would incur added together would makes this strategy worthwhile.
To know for sure, you have to plug in the numbers and analyse/compare the results you get for each scenario.
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