All Forum Posts by: Ryan Keenan

@Ryan Keenan

Your getting there. The Refinance Lender will provide a loan amount that is 70% to 80% LTV (I use 70% to stay conservative for analysis). Be sure to shop around for Lenders, because, they are all different. Different rates and different overlays for the loan. Just remember the more you take out the less cash flow you will have.

Annual Tax of $3,600 is $300 per month.  Not sure where you are getting $868.

Sounds like you actually have 2 loans to payoff with the Refi.  A conventional loan for the purchase and one for Rehab.  Or am I misunderstanding?

How did you purchase the property?  Terms?

What is the terms of the Short term Rehab financing?

How long have you owned the property?

Did you have tenants during the Rehab?

This definitely sounds like a BRRRR strategy. That is all I do. Here is the way I approach these deals:

1. Establish an ARV ($175K)

2. Determine my All-in costs limit which is the same as the Cash-Out Refinance Loan estimate ($175K x 70% LTV = $122,500)

3.  Inspect the property and get bid from my GC for the Rehab ($25K).  Also get estimate of time required.  I always add one more month to what ever he says (3 plus 1 + 4 months).  Time estimate is needed to help estimate Holding costs.

4.  Calculate Max Offer Price (MOP).  $122,500 - $25K = $97,500 minus Holding and Closing costs (Lets call these $7,000) = $90,500

5.  I may off $80K depending on what the asking price was.  Obviously these are negotiable.  Point is in order to get 100% of my cash out and payoff any loans I must keep the Purchase price, Holding and Closing costs to $90,500 or under.  Any thing over that amount means less cash I get back.

I also have to consider Cash Flow after the Refinance loan.  If it doesn't Cash Flow then what is the point.  So if I need to leave some cash in equity to keep a decent Cash Flow I may do that.  This I think is where you at.

@Ryan Keenan

Here's my napkin number crunching:

$100,000 Purchase price 

$25,000 Down payment 

$75,000 loan amount (terms?)

$750 1st Mortgage monthly payment

$$ Rehab costs ? Cash or financed?

$175,000 ARV

$122,500 New loan amount (70% LTV) Terms?

4.5% APR/30 years payment would be $621 monthly

What kind of loan terms were you using to get $200 more per month?

$47,500 Cash back after paying off $75,000 loan (not including Holding and Closing costs)

From what you have provided and if you get a 30 year term loan I think you will have a lower mortgage payment.

Howdy @Ryan Keenan

First you need an accurate ARV/FMV for your property. For Cash-out Refinance loans the Lender will normally provide an amount the is 70 - 80% LTV based on a current appraisal. Typically it is 75%. They will usually have seasoning requirements of 6 - 12 months of continuous occupation for rentals.

Is it for a recently Rehabbed property (BRRRR strategy)? Or one you have owned for a while?

Yes, you will have Closing costs .  They can be included in the loan.

So, if you have an ARV/Appraisal of $100K and you get a 75% LTV loan amount. Your Cash out will be $75K minus and existing loans to be paid off.

Of course the best thing to do is check with the Lenders for accurate information.

I have several unsecured lines that I have opened from my bank. I would suggest start with your current bank and ask for a line of credit. I think the whole process through Wells took 3-5 days.