BRRRR Questions and clarity
Just need some clarity on the BRRRR model.
Purchse price: $300,000
Rehab: $100,000
All in: $400,000
Appraisal:$650,000
Equity: $250,000
For this example, lets say I put down 20% of the purchase price ($60,000) as a down payment. And now the remaining amount on the loan is $240,000.
And i took out another loan for my rehab price quote at $100,000. So now I essentially owe $340,000 in total ($240,000 for the loan amount of the house) and ($100,000 for my rehab loan)
Now since my equity is only $250,000 and I owe a total of $340,000 back in loans, The BRRRR method wouldent work here correct? If this is correct can someone please let me know when the BRRRR method would work in a situation. Thank you!