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BRRRR Method: Tips? and Questions on the Refinancing
Posted on 4/17/18 at 9:47 am
Posted on 4/17/18 at 9:47 am
I'm really pushing myself to get into Real Estate Investments. I've been studying BiggerPockets material and listening to their podcasts all day. These guys are awesome! 
It definitely seems like the best way to get started and grow your holdings quickly is the BRRRR method:
Buy
Renovate
Rent
Refinance
Repeat
The idea is that it combines the instant equity and value-add that house flipping brings, with the long-term financial freedom and stability of rental properties. Also, it allows an investor to use private capital to get a short-term loan, and then refinance and pay off the private money investor and enjoy your instant equity and lower monthly payments.
However, they said that sometimes, a bank won't let you refinance until 6 months after the sale. Is this true with most mortgage lenders in LA? Also, what max percentage can you usually refinance? I know 70% is somewhat common. Anyone have any experience with this method?
It definitely seems like the best way to get started and grow your holdings quickly is the BRRRR method:
Buy
Renovate
Rent
Refinance
Repeat
The idea is that it combines the instant equity and value-add that house flipping brings, with the long-term financial freedom and stability of rental properties. Also, it allows an investor to use private capital to get a short-term loan, and then refinance and pay off the private money investor and enjoy your instant equity and lower monthly payments.
However, they said that sometimes, a bank won't let you refinance until 6 months after the sale. Is this true with most mortgage lenders in LA? Also, what max percentage can you usually refinance? I know 70% is somewhat common. Anyone have any experience with this method?
This post was edited on 4/17/18 at 9:52 am
2
Posted on 4/17/18 at 1:27 pm to Sev09
You will have the best luck with a local bank who will do in-house/portfolio loans if you want to refinance with no seasoning period. It’s gonna be a commercial loan with commercial termss.
As far as percent of cash out...I’ve done 75%-80% of ARV.
As far as percent of cash out...I’ve done 75%-80% of ARV.
This post was edited on 4/17/18 at 1:29 pm
Posted on 4/18/18 at 10:39 am to cmlsu
Thanks for the response! That’s great. What rate were you able to get, if you don’t mind me asking?
Posted on 4/18/18 at 12:32 pm to Sev09
5 yr amortized over 20...5.75 %
Rates have gone up since then. (Fall 2017)
Rates have gone up since then. (Fall 2017)
Posted on 4/18/18 at 12:57 pm to Sev09
I highly recommend glossing over the stickied threads if you haven't already. It's a wealth of knowledge.
Posted on 4/19/18 at 8:29 pm to StealthCalais11
Haven't ran a lot of scenarios doing this method, but you will get the best deals on something unwanted, and have the most appreation if it's in an area that is desired.
Just recognize the lost income during the process. 6-12 months might cost you 1500 a month and the cost of the loan.
If you bought ready to rent or even with a tenant already in, that's immediate income ready to compound in another investment.
Just recognize the lost income during the process. 6-12 months might cost you 1500 a month and the cost of the loan.
If you bought ready to rent or even with a tenant already in, that's immediate income ready to compound in another investment.
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