This may be a goofy question, but want to make sure I am thinking about this correctly. Every example I have seen on BP or other sources of how a BRRRR works when you are getting money from an investor/hard money lender up front, shows a payback to those folks of the same amount that was borrowed. For example, if you get $100K from hard money lender to buy/rehab the property, after you refi with the bank and pay everything off, all the examples would show paying the hard money lender back $100K, not $100K plus interest. Is that correct? I assume it isnt and if so, the ending numbers on how much you have left over (or not) are not correct. Am I thinking about that correctly and the examples are not including interest to simplify the example? Thanks in advance.
That’s because HMLs are interest only. You pay a percentage up front for the loan and then monthly payments for the interest on it.
There’s always an adjustment on the closing disclosure to account for the exact days so it’s unlikely it would be the exact loan amount at payout but fairly close to it.
Thank you so much!