Question about BRRRR strategy

2 Replies

My plan is to buy a property cash approximately $40k-60k range requiring about $25k-30k worth of rehab with an ARV of approximately $115k once work is complete. Monthly rent in the area I am searching is $1050-1200. That being said after that is complete and I have a tennant, at what point do I get a reappraisal to set up for refinancing, before or after landing a tennant? I understand that most banks willl only give 70% ARV, being that I'm buying the first property cash would this be considered a home equity loan?

@Michael Weis

A HELOC is a separate product. It's a home equity line of credit.

If you do a cash-out refinance that will become a mortgage.

You should speak with some lenders about the refi before purchasing the property. Some will have seasoning on the property before basing the refi on ARV vs. the purchase price.

@Michael Weis - some lenders will actually get you as much as 80% depending on the loan program and whether it is recourse (i.e. you personally co-sign for the loan to your legal entity) or non-recourse. 

Most traditional lenders have six-month seasoning (i.e. ownership) requirements for you to get refinanced and get your money back out. That being said, I'd encourage you to shoot for a higher ARV so you can get more than what you put in to the property back out via the refinancing.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here