Timeline for BRRRR Strategy
Member since 2018 · 9 posts · 3 votes
I am a bit stuck on how timelines work for the refinance portion of BRRR. I understand that I close on my property (Dec), renovate it (January) and then refinance it to pull out my money.
How long does it take you to have money back in your pockets the day after you call the renovation complete?
How can I move the process along as quickly as possible?
I see some folks moving much more quickly than others and I thought refinance loans take longer to originate and close. I have about $50,000 to cycle through.
Should I be working on ther sales using hard money lenders throughout the process? Just need to tidy up this part of the process. I feel stuck here.
Details would be very helpful
@Portia Bates To answer all your questions:
It depends on the timeframe. If you have a lender already lined up who you want to work with then you can probably have the refi done in little as two months. It also depends on whether or not you have to wait the seasoning period which could be 6-12 months.
But the most important thing you must account for is the order of the BRRRR process buy, rehab, RENT, Refinance, repeat. You want the property generating income before you take on debt. It would not be fun to have a mortgage payment coming in and no income, not to mention the holding cost (gas, electric, taxes, water, etc.)
The quickest way to move the process along is to start working with your lender ASAP. Providing all the necessary documents beforehand helps a lot! The refinance process can take as long as you and your lender make it take. I will be refinancing a property in a week but I started uploading documents months ago to get it out of the way. I’m waiting the 6 month seasoning period. There is also the delayed financing program that @Alexander Felice preaches about. If you put your rehab cost on the closing statement (make sure you listen to podcast 301 and read his article on exactly how to do it) you could get your money back even sooner with no seasoning period. On average, the refi period usually take 30-45 days (as told to me by my lender).
As to the hard money question, that’s up to you.
I am a bit stuck on how timelines work for the refinance portion of BRRR. I understand that I close on my property (Dec), renovate it (January) and then refinance it to pull out my money.
How long does it take you to have money back in your pockets the day after you call the renovation complete?
How can I move the process along as quickly as possible?
I see some folks moving much more quickly than others and I thought refinance loans take longer to originate and close. I have about $50,000 to cycle through.
Should I be working on ther sales using hard money lenders throughout the process? Just need to tidy up this part of the process. I feel stuck here.
Details would be very helpful
Some lenders require 6-12 months of seasoning after the original purchase before they will consider doing a new appraisal & using a value other than the amount you paid for it. Others do not. Look into "delayed financing." If you find a lender who does not require a seasoning period you can get a loan closed in as little as 30 days.
I think that I am learning that to move quickly, I need to make hard money lenders a big part of this process. Maybe alternate between the two? I am getting better and better at identifying deals so this may be a path forward.
@Portia Bates To answer all your questions:
It depends on the timeframe. If you have a lender already lined up who you want to work with then you can probably have the refi done in little as two months. It also depends on whether or not you have to wait the seasoning period which could be 6-12 months.
But the most important thing you must account for is the order of the BRRRR process buy, rehab, RENT, Refinance, repeat. You want the property generating income before you take on debt. It would not be fun to have a mortgage payment coming in and no income, not to mention the holding cost (gas, electric, taxes, water, etc.)
The quickest way to move the process along is to start working with your lender ASAP. Providing all the necessary documents beforehand helps a lot! The refinance process can take as long as you and your lender make it take. I will be refinancing a property in a week but I started uploading documents months ago to get it out of the way. I’m waiting the 6 month seasoning period. There is also the delayed financing program that @Alexander Felice preaches about. If you put your rehab cost on the closing statement (make sure you listen to podcast 301 and read his article on exactly how to do it) you could get your money back even sooner with no seasoning period. On average, the refi period usually take 30-45 days (as told to me by my lender).
As to the hard money question, that’s up to you.
@Portia Bates I wouldn't get too concerned about refinancing as quickly as possible. If you can show the bank that your property has performed well over the course of 6 months to a year, they may be more willing to give you a larger loan.
I agree with Martin, I'm currently working on a BRRRR I did most of the remodel in the first month and started working on the refi and just like everyone mentioned most banks want 6 to 12 months to refinance you. but I found a couple of banks that would do it, one the interest was locked for 3 years then it would balloon. The other agree to give me a fix rate but only for the money invested and not based on the value of the property. with the second option I only lose the money I put in for remodel which I'm okay with. I'm looking into recouping my money in 2 months. so the best advice I can give you is to start looking for banks that are willing to do it with out seasoning days. I must have been to 10 banks before I found a good option.
best of luck.
First thing I would say is to start with the end in mind. Talk to as many local lenders as possible before buying the deal so you know what you would qualify for. Also make sure you talk to all of these lenders about seasoning requirements. Many lenders will require you to own a property for 6-12 months before being able to do a cash-out refi. Some don't require this so make sure you know who they are and that you are approved for a loan at their bank. Regarding specific timing, usually it will take 30-45 days to get a refinance completed so figure out how long the renovations will take and then tack on 30-45 days.
I am so grateful that each of you took time from your busy schedules to share such valuable information with me. I will consider everything said and continue to try to find my path. I'm committed to the journey.
@Portia Bates To answer all your questions:
It depends on the timeframe. If you have a lender already lined up who you want to work with then you can probably have the refi done in little as two months. It also depends on whether or not you have to wait the seasoning period which could be 6-12 months.
But the most important thing you must account for is the order of the BRRRR process buy, rehab, RENT, Refinance, repeat. You want the property generating income before you take on debt. It would not be fun to have a mortgage payment coming in and no income, not to mention the holding cost (gas, electric, taxes, water, etc.)
The quickest way to move the process along is to start working with your lender ASAP. Providing all the necessary documents beforehand helps a lot! The refinance process can take as long as you and your lender make it take. I will be refinancing a property in a week but I started uploading documents months ago to get it out of the way. I’m waiting the 6 month seasoning period. There is also the delayed financing program that @Alexander Felice preaches about. If you put your rehab cost on the closing statement (make sure you listen to podcast 301 and read his article on exactly how to do it) you could get your money back even sooner with no seasoning period. On average, the refi period usually take 30-45 days (as told to me by my lender).
As to the hard money question, that’s up to you.
How long is a typical BRRRR in your experiences?