Hypothetical BRRRR: What am I missing?

Question

Let’s say I had $100,000 to invest.

B. I found a house for $60,000 and bought it for cash (what would closing cost be for a $60k house paid for with cash?)

R. I spend $30,000 in renovations.

R. I rent it out for $1,000 a month.

R. (How long would I have to wait to refinance?) The value after repairs is $125,000, 80% of that is $96,000 (how much would closing cost be for a $96,000 mortgage?)

Griffin Malcolm · Answer

use Spark Lending. they don't have any seasoning periods. when you rehab the property and rent it out you can refinance with them

Chris Seveney · Answer

Paying cash for a property closing costs will be lower but it depends on state and location as you have recording costs etc. There are calculators online from title companies that can estimate closing costs.

Christian Ehlers · Answer

Usually there's a 6 to 12 month "seasoning Period" with a lot of lenders to refi the money out but there are lenders out there that will do a much shorter time period. Talk to a few mortgage brokers about your plans and they should be able to help you, if not you need to find "portfolio lenders" - small local banks that will be flexible on their terms because they keep the loans in house.

Jay Hurst · Answer

@Jasper Franklin Heilig If you pay cash for the property and you refi inside of 6 months that is called "delayed financing" which would allow you to borrow the LESSOR off 75% (assuming single family) or what you paid for the property plus closing costs. so with your numbers you could borrower the 60k plus what ever the costs are on the loan. You can do that anytime before 6 months.

If you wait until after 6 months has passed you can borrow up to 75% of the 125k. The 12 month seasoning only applies to when you have current financing on the subject property.

If you cannot wait the 6 months and you need more then the 60k we have double close products that will allow you to pull out right away, then refi into a conventional. OR, you can utilize a non conventional DSCR program that be more expensive overall then even a double close but another option.

Jay Hurst · Answer

sure, lets assume a 100k market value after rehab with a 50k rehab loan and a month has gone by since you purchased with rehab complete. We would give a bridge loan for 75% of the value so 75k with our own money so we make our own rules and do not have any seasoning requirements for value. We then turn around and refi the 75% into a conventional loan closing just 31 days after closing on the bridge loan. This is because their is no value seasoning if there is no cash out (well, there is but it is only 30 days, so that is why we close the refi in 31 days) so, end of the day you have your 25k in hand AND and a 30 year fixed with the lowest rate with the best terms available.

Hypothetical BRRRR: What am I missing?

Hypothetical BRRRR: What am I missing?

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