All Forum Posts by: Andrew Gordon

Awesome advice guys, thanks. I'm new to wholesaling and this makes sense so I'll try and adjust my strategy a bit

I'm using the flat percentage of ARV method to come up with an offer price for a property which just multiplies the ARV by a certain %. However, certain markets have different rates. Folks who use this method start with 70% and adjust for the area - if it's a desirable, high appreciation area, people are less likely to sell and flippers are more likely to pay more, so you might multiply the ARV by 75%. If it's the opposite, a low appreciation area with more crime, maybe offer 65% of the ARV. And so on depending on how desirable / undesirable the area is.

So my question is, for anyone in Denver using this method, what % rate are you using? I was guessing 72% since it's a higher appreciation area.

Basically, I am talking to lenders to get lined up to do a BRRR in the next couple months and everyone I have spoken to has told me that you can't use the ARV to cash out refi unless you have owned the property for at least a year.

If it's been under a year, you can only refi based on the money you have put into the property: the purchase price + the rehab cost. So you can get up to 80% of your capital back, but it's not that great because you are still leaving 20% of the money you have spent in the property. Basically, it's a 20% down payment. Not really a BRRRR as I have heard it described!

So, I was a little surprised by this because it wasn't mentioned in any of the BRRRR books / videos / learning materials I have used. Waiting a year to get your capital back isn't great.

I am currently talking to a portfolio lender at first bank who can refi with the property in the LLC. Fanny / Freddie lenders won't refi LLC owned properties (as far as I know), but I am curious if anyone can steer me in the right direction to a lender that can refi based on the ARV within a year. All lenders I have spoken to say they can't do it.

Thanks in advance everyone!

- Andrew