This is my first post and I need some help please. I am a little confused still on the BRRR method. I have found a property that I believe may be a good deal but am trying to figure out how to pay off the original lender. I may have a private lender at 6% for a $430,000 loan. What confuses me is when I am ready to refinance does that mean I need to be able to refi for 75% to equal the $455,800 to pay off the original lender. If anybody reviews my report can you see where I went wrong?
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Derek Rubinstein I went through this recently with one of my clients in Berwyn. I explained to him that although it is theoretically possible to get every single penny invested out of a deal, it is not always something you will even want to do in reality. Whenever you "cash out" refinance you will increase your mortgage payment, which will in turn decrease cash flow. You should always carefully weigh whether or not this sacrifice is worth it.
With this deal, the biggest problem I can think of that can't be quantified on the spread sheet is budget over run. I would speak to @Ronan M. as he is pretty familiar with PIlsen.