Help with a Refinance on a Rental Property

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Looking for insight from landlords or Brandon(the man, the myth, the legend himself) that have done the BRRRR strategy as coined by

@Brandon Turner

We bought our 1st rental cash, all renovations are completed and we are getting it ready to list for rent. We are hoping someone can explain what to expect when trying to refinance and pull our cash out for the next one. Property is currently owned in an LLC so it appears we're most likely going to have to get a commercial mortgage which will probably be adjustable? Do people hold rentals in their personal name so they can get more favorable rates/terms/lengths on the financing and just pile on an umbrella insurance policy for protection?

Any and all information will help!

Thanks,

Ray & Hannah

[Meghan McCallum]

Ray & Hanna congrats!

1) You have to get it rented, most banks will want a DSR (debt service ratio) of 1.2 or higher

2) Determine your financing - depending on your situation you may be able to get a conventional loan (each could carry 4, some banks allow 10 per person if your credit and income can support it) or just go commercial (those are normally adjustable, I have found up to 7 years and the rates are a little higher but if you BRRRR'd it right you should be able to support that higher rate)

2) The bank will order an appraisal, each will have its own requirements as to how much equity you can liquidate (I like 75%)

3) After your appraisal you will have to prove how much you put into the renovation

4) get your cash and do it again (check with the bank and find out what their EXACT policy and procedure for transferring the property into your LLC

5) once you get your cash contact RE lawyer and COVER THOSE ASSETS make sure your insurance policy is a commercial one, get an umbrella policy and find someone who really knows what your intention is with the property

I've done this over and over again!!!! Good luck!