Updated over 8 years ago on . Most recent reply
Refinancing a Home Run BRRRR
Used search function and can't find my exact scenario so just thought I would jump in with what I hope will be a "value add" to the forum. I recently bought a Historic District duplex (separate buildings) 2/2 and 1/2 Bank Repo. Bought premarket from bank because my realtor had been pestering the bank for a while so they gave her first shot. We knew it was a grand slam immediately and closed in 14 days all cash 65K.
Fast forward to today we are 3/4 done with reno no surprises and have gone mid to high end with most of the finishes will have around 45k in reno no hard money. A comp/flip just sold for 250k 2 blocks away (this is our primary comp for property I hope (-: ). So I think we might be able to refinance $175,000 at 70% LTV taking around 60K cash. So finally to my question... I want to know what % are buy and hold investors taking out at closing on similar, successful, BRRRR properties? I want to ensure positive cash flow but also want to maximize my ability to purchase and reno more cash properties. Is there a magic number to ensure long term success? Using BP's BRRRR calculator I still cash flow $181 a month so $90 per door in this scenario. Any suggestions for success in the long haul would be greatly appreciated.
Most Popular Reply
@Robert Shelton This really depends on your overall goals, risk tolerance, and time horizon. For instance, I am young and my goal at this stage in life is to accumulate wealth over a 30-35 year time frame, and I have a relatively high risk tolerance. I have a solid job that provides the income I need to support my family so I am not concerned with cash flow. So if I were in your shoes, I would leverage the maximum LTV for the lowest rate and longest time frame available to me as long as I don't have to "feed" a negative cash flow property. This maximizes my return on investment and gives me funds to accumulate more properties. Like I said in my prior post, if you're uncomfortable with the cash flow at the max LTV, have your loan officer help you optimize the loan amount to get you to a certain mortgage payment where you're comfortable on the cash flow side.
If you don't already have a solid LO, @Upen Patel would be a good connection for you to do financing in Maryland.