Questions about the BRRRR

[Terry Sweeney]

So I spoke with my lender today and they informed me I had used a majority of my equity from my properties. However, I just renovated two properties in order to have them refinanced to gain more equity for more purchases. When I advised my lender of the work I had done, I was told it won’t really matter. The original appraisal (before rehab) would not change much because the house was purchased at a cheaper price lowering the property’s value? Which I didn’t really understand because I could sell the properties for a significantly higher price than what they are appraised at.

My lender told me to consider a construction loan for future purchases. But when explained, that type of loan sounded better for larger rehabs. But I only buy small single family homes. Is there a better option?

Thanks

[Andrew Postell]

@Terry Sweeney all of this sounds fine to me.  Sometimes lenders don't understand what we try to do as investors.  If you are purchasing properties and improving the value, there could be some timing issues with using conventional loans to do a cash out refinance but it is certainly doable.  If they won't do it, go to another lender.