hard money lenders & timelines
Hi guys,
I'm Jerome, I recently purchased my first house back in April of 2026 and it's been going very well thus far. I am now seeing a lot of content involving BRRR strategy and how it helped so many people grow their portfolio and I wanted to get involved. Come around may-october of next year I will want to purchase my first BRRR property but I don't fully understand how the hard money lender or payback timeline works or how to get in touch with local contractors to get a estimate for repairs or even planning a timeline for refinancing.... any tips, tricks, or youtubers/mentors that walk you through the process. I've been doing my best to watch and study just wanting to reach a hand out just incase someone can point me in the right direction.
Most Popular Reply
Let's buy 1234 Example Ave. We are buying it for 100k. It needs 75k in work. That's 175k project cost. First thing I do is divide the project cost by ARV to get that number. So let's say it has a 70% project cost so 175k/.7 = 250k. We need an ARV of 250k for this project to have the room to get your money out at the refinance table.
So you buy this house for 100k. You are new so you get 80% leverage. That's 80k toward the purchase and 75k in escrow for rehab for a total loan amount of 155k. That number is your payoff. When you go to sell or refi the title company will retrieve the payoff to any lien, it's a key part of their job. Your 155k payoff is part of the escrow process.
So let's say you bought the house and the rehab took 9 months but it's finally done, these days there are lenders who will refi you without a lease. So when ready you will need to apply for a DSCR loan. This is where your credit is key. I just priced a DSCR for a 660 credit. Their par rate was 8.5%. I also have a deal I am closing next week, a DSCR where the credit was 770, and their par rate was in the 6s.
Also, you would need to bring 20k plus closing costs plus show at least 6 months in holding costs so you would need 35k just to get through the transaction. And if your margins are thin, it most likely is not coming back to you at the refinance. You'll have to leave most or all in, just hope you don't have to come to the table with cash to close the refi.
The lower the project cost to ARV is, the better the deal. Years ago, when I would hunt deals the traditional way: Agent hunting MLS and Wholesale, you'd hope and pray to get a 65% - 70% project cost %. And at the end of the day the 65% - 70% project costs easily become 80% - 85% project costs after intangibles.
A deal to me now is something under 60% project cost. You have a nice meaty margin that can beat intangibles or provide a score if everything goes well.