Single family home but just found out about the BRRRR Method

[Blanca Munoz]

Hello, so I bought my first house and before I bought it, I didn't know about the BRRRR Method. I purchased the house for $145,000 and they were asking for $180,000. It appraised for $150,000. Renovations would cost around $30,000 but the only things I've done are Plumbing, foundation work, gas line, and new windows. All of this has cost me about $10,000. I paid in cash for all of this. My question is, since I already closed on the house, can I still do the BRRRR method? If so, how do I go about it. Should I do a HELOC to renovate the rest? I'm thinking of doing the BRRRR method but house hacking it since it's my first home. Is this possible? I just started watching a lot of videos on the BRRRR method and don't know what to do after doing those repairs. Can someone give me advice? I have all the numbers from the loan if someone needs them to help me run it and for it to make sense for me. I guess I'll see if I made a good deal or not in order for this to work.

[David Ramirez]

Since you just bought it and haven't done any significant force appreciation, a HELOC will probably not be an option, as you typically need at least 20% equity in your house.

The big question is: Is there a pre-payment penalty on your 30-year conventional loan?

Most of the time, they make you decide the pre-payment penalty based on a range of interest rates they offer. If you chose the lowest interest rate possible, your pre-payment penalty is probably 5% in the 1st year, 4% in the 2nd year, 3% in the 3rd year, 2% in the 4th year, and 1% in the 5th year. This means that if you remodel and refinance in the first year, you will have to pay a 5% pre-payment penalty.