I want to renovate the property but its occupied by tenants

[Mark Yesa]

Hello BP

I just bought a duplex, in auburn WA, its my first investment property and i need your advice, correct me if im wrong, for me to be able to do a BRRRR exit strategy, rehab the place, then get new renters, appraised the property, refinance to new loan, to pay hardmoney then repeat, right? But i dont want to tell evic tenants and ruin the place, what best move i can do?

Thank you

[Michael Haas]

@Mark Yesa it sounds like you took at a hard money loan at a high interest rate without any exit strategy in mind. Seems like you've realized this for yourself already, but not having an exit strategy is a mistake on any property, especially one financed with hard money.

You mentioned an inspection though - did you close on this property or are you under contract (aka "mutual")? If you haven't closed yet and have the time and resources to negotiate a switch to a 20-25% investment property loan that would be your best option. You'd be looking at around 3.25% interest rates on a 30 year right now and that's hard to beat. 

Truthfully, if the property truly is cosmetic it may be hard to get the value bump after renovations that you're looking for in a BRRR unless maybe you got a smoking deal on it. Our market is pretty competitive, so the BRRR's that I see penciling tend to be pretty hairy, major renovations. Happy to help with more concrete answers if you can share more concrete details, just let me know!

Best of luck,