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Did I do a Brrrr right?
Purchase property at 250K, add 30K in repairs. Estimated ARV is 320K. With the calculator when I go to refinance what would I input as my "new" loan amount be? If I'm trying to do the 65-70% cash out. Am I getting the new loan for all $320K or a lower amount as there would now be equity in the home? at 320 it still cashflows but just a little bit.
It's this one piece that is confusing me, but once I get it I think we are ready to move on our first property.
@David Taylor on an investment property you can pull out 70% ARV so $224 000. With your rehab budget of $30000 you can only offer $194000 for the property to do the BRRR.
@Tim Herman thanks Tim. So to confirm can pull out 70% of ARV. Does it matter how much equity is in it? Or is it just purely ARV?
Example ARV is 224k with only 40k equity vs 100k equity? Can i still cash out 70% either way?
@David Taylor your example ARV $224000-$40000= $184000 mortgage. $224000 times 70%= $156800. Your current mortgage is higher than what you can refinance so you cannot pull any money out. $224000-$100000 =$124000 mortgage. You can refinance a new loan for $156800-$124000= $32800 cash in pocket. Looks like you are going to live there as your down payment is so low as investors have to put 20% down. Estimate your loan interest will be higher as there will be PMI.
Got it! So equity is the key. Thanks!