BRRRR Method - Newbie

2 Replies

Hi there. I am trying to understand the BRRRR methodology but am having some trouble. I get the first first few steps. Buy=got it! Rehab=got it! Rent=got it! REFI=not so much.... I dont understand the refinance portion of this as clearly as the others...are you refinancing it after a certain time frame? I'm just thinking that you can only do this so many times before the bank is going to say no, you're debt to income ratio is not high enough. (Personal or business). Am I wrong? I know I have heard that some banks require "seasoning." Is this a time frame that a bank usually determines is long enough and then will give you a loan against it? I'm sorry for asking such rudimentary questions but I just cant get past it. Thanks for any advice or words of wisdom. I really do appreciate it! P.s. I will be selling my home shortly and will receive about $70k in profit. If you were me, how would you invest it? Thanks again!!!

@Alisha Gilliam

refinance isn't so complicated, but at first it can be overwhelming for sure.

Refi in general doesn't have a time frame. That said, many loan products do require a seasoning period. This means the lender wants you to wait a certain amount of time before they will lend. Sometimes this is a bank requirement, sometimes this is the underwriter requirement.

For instance, fannie mae (the underwriter for most residential mortgages) says they want you to wait 6 months. That is not a rule but it is fairly standard, (though there are ways around it).

Assuming 6 months from the time of a cash purchase to refi is a safe assumption.

as for your 70k, aren't you considering doing a BRRRR? use it for that!

I too need some clarification on the last "R" of the process. Is the purpose of the refinance to re-evaluate the homes appraised value and leverage against it for another flip the a HELOC OR home equity loan?