REFINANCING A LOAN TO REINVEST

[Benjamin Walker]

I am confused about exactly how to refinance. Can someone explain the process to me step by step and explain how you get your return??

[Kenneth Garrett]

@Benjamin Walker

If you are a buy n hold investor you can use the BRRRR strategy. Buy, rehab, rent, refi, repeat. You can thank @Brandon Turner for the acronym. 

Step 1 Purchase after you have analyzed the deal         

Step 2 Rehab to provide added value

Step 3 Upon completion secure a tenant

Step 4 Refi with a mortgage 

Step 5 Repeat the process

When buying know your market and ARV for your area. Property must cash flow. Debt ratio DSCR 1.25 or better. Appraisal must come out high enough to refi. Example buy at 100K rehab 30K total investment 130K. Don't forget holding costs, taxes, utilities, insurance. If property appraises at 180K at 75% LTV the refi is 135K. If 80% LTV 144K.

This is how you refinance.

I use commercial loans a lot easier to fund but you will pay a higher interest rate 5.50% and 20-25 year amortization.

Good Luck.