BRRR Strategy - Question

6 Replies

I want to implement the BRRR strategy, but before doing so I had a question because this would be my first time possibly doing it.

If I would pay for a property and rehab in cash, how long does it typically take to pull out Equity from the property? From my understanding it can take up to 6 months. Is there anyway to pull it out sooner? Are there any lenders that will allow you to pull out the equity quicker this way I can work on the next project? 

Thanks!

Adeel Makda

There are some lenders who will allow you to pull it out sooner. But you'll have to find these people. Call as many lenders in the area where the property is as you can. 

If you are spending cash you can cash out under delayed financing exception any time otherwise you have to wait 6 month. 

This is from another BP member and I thought it looked like a good strategy to get your cash back quickly. It’s becomes a regular refi and not a cash out refi. I haven’t tried it yet but it looks interesting. Here is the meat of it...

  • You create an LLC
  • You buy a home
  • Your LLC gives you a loan for the home
  • You file the deed for that loan at the county courthouse
  • You use the money from the LLC to buy and fix up the property
  • Once the property is completed, your conventional lender comes to refinance the loan
  • Your conventional lender runs title and sees there is a loan.
  • Your conventional lender refinances you into a new loan, and cuts a check to your LLCâ�¦a check in the amount of 75% of the value.
Good Luck!

I’m in the same situation now. I would advise calling a large mortgage broker and see what they can do. I called around local and was unsuccessful trying to get it done before 6 months. My broker that I’ve used before did not seem like it’d be a problem but it’d have to be in my name for 60 days. I hope that helps.

I went through this on a property in Dallas, Tx. I paid cash for the property and cash for the rehab. My traditional lender told me I could cash out refinance 100% of the purchase price within the first 6 months and 75%LTV after 6 months. My goal was to finish the project in 3 and refinance the purchase price. It took me 7 months and my cash out refinance just funded. I ended up doing a small addition to the property so it look longer than expected.

Originally posted by @Adeel Makda :

I want to implement the BRRR strategy, but before doing so I had a question because this would be my first time possibly doing it.

If I would pay for a property and rehab in cash, how long does it typically take to pull out Equity from the property? From my understanding it can take up to 6 months. Is there anyway to pull it out sooner? Are there any lenders that will allow you to pull out the equity quicker this way I can work on the next project? 

Thanks!

Adeel Makda

Adeel,

I am currently doing something similar to you.  I found out that to refinance before the 6-12 month "seasoning" period..  the most you can cash out is the price you purchased the property for, along with closing costs.  I found a credit union that is willing to do a quick turn around cash out on a rental.  They told me that they handle mortgages across the country.  

Sharonview Credit Union is the lender i am going with.  I called 20+ lenders before i found one that would do it.  Good luck.

Adam                   

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