Refinancing in BRRR method

[Chris Lounsbury]

Hi BP world. I need some advice on a deal that my family did using the BRRR method. We bought a duplex for 20k, put 55k into it and it is now renting for 1650/month. We weren't able to get a conventional loan when we bought the property and so the 75k was out of pocket. We want to refinance this deal now and pull our money out of it. It will appraise for around 130k-140k. We reached out to a lender and he gave us some options. We can take anywhere from 60-75% LTV at a 7.4-8.2% interest rate amortized over 30 years, (with 2-4 points thrown in there somewhere). Our numbers still fall within the 2% rule of cash flow per month, but as we were looking over the total paid back over the life of the loan we noticed that we would be paying back over 200k. I am wondering if this is normal, paying 100% in interest payments? That seems really high to me. Does anyone have any suggestions or know of a lender with more reasonable terms? Am i missing something in my calculations? This is my first time dealing with refinancing, or loans at all for that matter. Thank you in advance for any and all advice.

[Chris Shipman]

Concerning the interest: Yes with the above numbers you mentioned that is how much you would be looking to pay. Look for a loan calculator online and use your numbers and you can see a breakdown of how much you'll be paying on the premium as well as in interest.

Concerning how much equity to pull: Depends on more of where you want to take your investing. If you need more cash flow then the lower LTV seems to be more appropriate if you want a big pay out to try and reinvest quickly then the larger LTV refi may be a better idea.