All Forum Posts by: Kevin Trumbull

@Jerod Smith

The square foot rehab estimate method is really going to depend on your market, I use $27/ft in KC for a good rehab.

Are you using the 70% rule to figure out your offer price? Finding deals that work using the BRRRR method are much harder to find, and only getting harder as prices recover.

If you have all of your numbers correct, yes you can usually fund a BRRRR the same way you'd fund a flip, just make sure you have your refinance numbers calculated correctly. Generally if you buy using the 70% rule, then your cash out refi at 75% ARV should get you close to no money out of pocket.

@Adam Schellhammer Does that hard money loan have a prepayment penalty? That is an interestingly low interest rate for hard money. Anyway, usually with BRRRR you are looking to refinance out around the 6 month mark (depending on your lender), so normally you'd get pre-approved with a conventional lender before you begin so that you have a decent idea if you can refinance at the end.

Being 2 years out, that's sorta tricky, and yes it sounds a little risky.  Those are great terms, but you may want to look at some 6-9 month loan term options so that you can cash out quicker and get to the Repeat 'R' faster. :)

I look for $250/mo if I do a standard 20% down deal, but if I'm doing a BRRRR deal with little to no money out of pocket my minimum is $100/mo. The more you put down the better the cash flow, but if I can cash flow with no money in, that's the best scenario.

This really is dependent on the 'bank', or more accurately, lender that you use. Some lenders don't require any seasoning to lend on ARV, some 90 days, some 6 months, some 12 months. It really depends, so you need to call around to various lenders (and lender types) until you find one that can help you accomplish your goals in the time frame that works for you.

I think what you have is fine, I just asked because if her name wasn't on the account it might be considered a 'gift' which can cause complications. But if her name is on the account too you should be fine.

That will depend on your lender, be sure to have a discussion with them early on to find out what their 'HELOC as down payment' policy is, including any seasoning requirements they may have. Some won't allow it, some will.

Is your wife's name on the holding checking account too?

One take away from @Chris Seveney post is the BRRRR strategy is really a short term thing, like you buy your deal, rehab it, rent it out, then usually do your cash out refi within 6 to 12 months, then go do it again.

Waiting 5 years for appreciation isn't really the BRRRR strategy. It's about forcing appreciation through rehab, not waiting for it. This is probably already clicking, but Chris made a good point so I wanted to reinforce it.

Great, I see the gears turning. So part of BRRRR is the make sure you can actually execute the Refinance step. :) Before you jump in to a deal, make sure you find the mortgage company you want to work with on the cash out refi, get pre-approved, and get some type of confirmation from them that they'll cash you out at the end.

Yes, that's the key, you need to think about your long term strategy, so when working the BRRRR method, you need to make sure your property will cash flow when you have the long term 75% ARV mortgage at the end, which people sometimes don't plan for.

The main benefit to the BRRRR method is you are in for little to no cash, but you have to make sure it will cash flow at the end... meaning you need to make sure you have a really good deal going in.