Has anyone BRRRR’d without rehabbing? More like buy & refinance

Milwaukee, Wisconsin
BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Has anyone BRRRR’d without rehabbing? More like buy & refinance

Joseph Vanderlinde
Member since 2022 · 1 post · 2 votes

I have a off market triplex I'll be closing on in a week and I'm buying it way under market value. It doesn't really need any work besides the units being slightly outdated but it's fully rented (rents are low). The seller just wants to liquidate some of his assets which is why I think he's selling it so low. I had a broker run a CMA which it was valued at on the low end $155k, average $170k, high end $190k. Given that's it's fully rented I won't be able to do any updating to the units at all. I'll be all in at $108k. surprisingly deals like this are still out there! My plan is to do a cash out refi to pay off my lender. I'm just curious if anyone has had a similar deal or has been able to cash out refi without rehabbing. Thank you.

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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
4y

You don't have to renovate to BRRRR. As long as you're all in under 70% of ARV it's a BRRRRR

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  • Larry Turowski
    Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    I’ve done this plenty of times.  Silence done nothing on, others I’ve done a little and if the bank wanted to know I just had a scope of work that read “painting, as needed,” when very little was needed.  I haven’t always gotten all my money back out.  Sometime I have and more. But I’ve definitely done it. 

    2Reply
  • Ryan Leonard
    Rental Property Investor · Milwaukee · Member since 2020 · 30 posts · 13 votes
    4y

    Hi Joseph - glad to hear you've gotten such a good deal in a competitive market like this. I haven't had this specific experience, but I do agree with Larry. I can't imagine you'd run into any problems with your refinance. Banks lend on the fair market value of the property, and since your property was off-market, I would assume the appraiser would factor that in when running their numbers. Every appraiser is different, but I can't imagine you would run into trouble with your refinance. I wish you the best of luck!

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    4y
    Quote from @Joseph Vanderlinde:

    I have a off market triplex I'll be closing on in a week and I'm buying it way under market value. It doesn't really need any work besides the units being slightly outdated but it's fully rented (rents are low). The seller just wants to liquidate some of his assets which is why I think he's selling it so low. I had a broker run a CMA which it was valued at on the low end $155k, average $170k, high end $190k. Given that's it's fully rented I won't be able to do any updating to the units at all. I'll be all in at $108k. surprisingly deals like this are still out there! My plan is to do a cash out refi to pay off my lender. I'm just curious if anyone has had a similar deal or has been able to cash out refi without rehabbing. Thank you.


    An issue you will run into is the seasoning requirement. Most DSCR lenders require 6 months seasoning until you can refi. I have a few that do not have a seasoning requirement though. Happy to connect.

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    You don't have to renovate to BRRRR. As long as you're all in under 70% of ARV it's a BRRRRR

    3Reply
  • Steven Goldman
    Lender · PA · Member since 2019 · 535 posts · 461 votes
    4y

    I feel like people are mixing apples and oranges. If you buy a property significantly under value you are unlikely to find a lender willing to immediately refinance you at appraised value. You will need to have at least 6 months seasoning for most financial institutions. Obviously, if you buy a property significantly under value it is a good investment. It is not however a BRRRR. It would be a buy and refinance. By its definition you need to rehab to do a BRRRR. Buy, rehab, rent refinance repeat. Although a buy and refinance is a wonderful thing!

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  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    4y

    @Joseph Vanderlinde-  you might clarify with the  lender you  plan on doing the  cash out refinance  with   : 1) the value they  will use for the  ltv  calcualtions ...some  will use  acq price and  some  may use appraisal  2)  the max ltv for a  cash out  refi  3 plex  3)  get  present pricing  ( it will likely be  7% +  with substantial points ( loan fee) 

    1Reply
  • Sam Bhattacharya
    Rental Property Investor · Damascus, MD · Member since 2018 · 50 posts · 31 votes
    3y
    Quote from @Larry Turowski:

    I’ve done this plenty of times.  Silence done nothing on, others I’ve done a little and if the bank wanted to know I just had a scope of work that read “painting, as needed,” when very little was needed.  I haven’t always gotten all my money back out.  Sometime I have and more. But I’ve definitely done it. 

    How do you find and buy properties that are so far under market value?  Do you look for distressed properties?  What strategies do you use?

    0Reply
  • Larry Turowski
    Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    3y
    Quote from @Sam Bhattacharya:
    Quote from @Larry Turowski:

    I’ve done this plenty of times.  Silence done nothing on, others I’ve done a little and if the bank wanted to know I just had a scope of work that read “painting, as needed,” when very little was needed.  I haven’t always gotten all my money back out.  Sometime I have and more. But I’ve definitely done it. 

    How do you find and buy properties that are so far under market value?  Do you look for distressed properties?  What strategies do you use?

    You’ve got to market for them. Website with SEO, pay per click, direct mail, cold calling, billboards, etc. It takes money. 
    0Reply
  • Larry Turowski
    Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    3y
    Quote from @Steven Goldman:

    I feel like people are mixing apples and oranges. If you buy a property significantly under value you are unlikely to find a lender willing to immediately refinance you at appraised value. You will need to have at least 6 months seasoning for most financial institutions. Obviously, if you buy a property significantly under value it is a good investment. It is not however a BRRRR. It would be a buy and refinance. By its definition you need to rehab to do a BRRRR. Buy, rehab, rent refinance repeat. Although a buy and refinance is a wonderful thing!

    I'd still lump them into the BRRRR category.  My business model is to BRRRR, it just so happens that once in a while the rehab is extremely light and once in a very great while it is just cleaning.  While you are correct that most lenders won't immediately refinance at appraised value, some will. Those are the ones I want. In fact, I'm doing one right now. I'll be closing on cash purchase significantly under value in 2 or 3 weeks and have already begun the refi.  My bank knows me and my business and knows model and they are happy to do it.  I'll be refinanced probably two weeks after I close, and based on an appraisal that happened last week.  My rehab on this one will be very light.
    0Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    Yes, and, it’s magical. As stated, renovations are not technically necessary for a refi. 90-180 days seasoning is, however, but often the process can begin from an underwriting perspective before hand.

    0Reply
  • Sam Bhattacharya
    Rental Property Investor · Damascus, MD · Member since 2018 · 50 posts · 31 votes
    3y
    Quote from @Larry Turowski:
    Quote from @Sam Bhattacharya:
    Quote from @Larry Turowski:

    I’ve done this plenty of times.  Silence done nothing on, others I’ve done a little and if the bank wanted to know I just had a scope of work that read “painting, as needed,” when very little was needed.  I haven’t always gotten all my money back out.  Sometime I have and more. But I’ve definitely done it. 

    How do you find and buy properties that are so far under market value?  Do you look for distressed properties?  What strategies do you use?

    You’ve got to market for them. Website with SEO, pay per click, direct mail, cold calling, billboards, etc. It takes money. 

    Okay, thank you for sharing that.  Which of those strategies have worked the best for you?  Also, do you buy at auctions?

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