BRRR strategy refinance?

[Victor Spencer II]

For the BRRR strategy when you go to refinance do you have to put a down payment for the refinanced loan?

[Jordan Han]

The idea is to buy a property with cash (or hard money), rehab it to increase the ARV (after repair value), rent it out, refinance, and repeat.

Example:

1. Purchase Property for $100,000

2. Rehab Costs: $50,000

3. After Repair Value: $200,000

4. Refinance at the new value (this will require an appraisal). Depending on your bank/lender, loan-to-value (LTV) may be different. Assuming 75% LTV, you will get $150,000 back from the refinance.

5. Repeat the process.

Net down payment = Initial Purchase + Rehab - refinance amount

= 100,000 + 50,000 - 150,000

= 0