Newbie, BRRRR, refinance, Dallas, TX.....please help!

[Cillora Hicks]

Hi All, 

My partner and I are in the process of preparing to purchase our first property in the Dallas, TX market. Our goal is to use the BRRRR method, buy a fixer upper multi-family property using a hard money loan, rehab, and refinance. My question is: After rehabbing a property with a hard money loan, do I have to pay a down payment when I get ready to refinance with a bank or credit union? What fees should I expect when refinancing from a hard money loan to a bank or credit union? Also, do I have to owner occupy the residence?

Thanks

[Michael Myers]

@Cillora Hicks the down payment aspect will depend on the ARV of the property. If you're getting an 80% LTV loan, your "down payment" will be 20% of the ARV. Obviously if you score a perfect BRRRR, the forced appreciation / equity gain would "pay" for your down payment, so you wouldn't be out of pocket anything. For BRRRR refinance, it's simpler to think of it as money left in rather than a down payment to get the refinance.

Loan costs will depend on who you go through, but will probably be in the ballpark of $3-5k. You can always call around to different lenders and give them a hypothetical scenario and they’ll tell you what the fees would be. 

You don't have to owner occupy unless you're getting a specific loan that requires owner occupancy (like FHA). One note around the "owner occupancy" area is to make sure your insurance is for a rental, otherwise you could get in trouble down the road when making claims. Good luck!!