Rental Property Investor · Buena Vista, CO · Member since 2015 · 101 posts · 47 votes
Hey All - hope this is not a redundant topic and that I put it in the right forum...
Wondering about the refinance portion of BRRRR. Usually a lender wants two years of rent rolls before considering a refinance on a non-owner occ. Question is, how to speed up/accelerate the strategy with this hindering the process? Advice would be awesome!
@Don Nelson If you have a lease in place, most lenders would take 75% of that and give you credit for it. If it has less than 2 years of history, as long as the 75% value covers expenses, it shouldn't count against your DTI, making it fairly simple to refinance, assuming you have other income.
@Josh Mitchell, that's great! I was not aware that was an option. So...I have a gross lease at $2000/month. The lender will consider a loan with a gross payment of not more than $1500/m. If my expenses are less than that, I can refinance? I'll call them and see...that's a big plus.
@Don Nelson Sorry, maybe I was not clear enough or not understanding your reply. If you do not have 2 year history, you will not be able to count rental income in most cases, but if 75% of the rent covers expenses, it will not count against you. Example: $2,000 rent with $1,400 costs. @ 75% ($1,500) you would be making $100 profit/mo. but without the 2 year history, you would just zero out that amount and not be credited that amount, or have that amount count against you. So basically, other income you have will be used to qualify for the refinance. Hopefully that clears things up?
Ahhh @Josh Mitchell, that's precisely the problem I'm trying to overcome. I thought you were saying we could count that prior to the 2 year ownership. Bummer. No, I already know this - I am trying to find a way around it.