BRRR

[Seth Willis]

Hello all,

I plan to invest in my first rental property soon using the BRRR method. I have some newbie questions regarding how it all works.

I buy a property for 30k, rehab expenses are 20k plus roll the closing fees into the loan (about 5k) so a total loan of 55k. The ARV would be approximately $90k-100k. So after the rehab (lets say i have a private lender that wants interest only payments for 6 months then the full payment) I go to refi the property and they give me $90k I turn around and pay off the loan and whatever interest is owed ($63,250 total) so my total equity would be $26,750. Do I get that in cash and available to use on other houses? Would i be able to refi after 6 months? And is this even a good scenario (based off of a possible deal). I want to make sure I fully understand it before I jump in. Thank youyou

:any other info needed or anything I am missing? 

[Darren Budahn]

Seth Willis

It sounds like you understand the process

Yes, if you cash out refi after 6 months you should be able to get a loan for 75% of ARV. You have to wait 6 months if you are looking for a conventional loan. Yes, you can use the cash for your next deal.

I think the biggest problem will be finding 30k houses that only need 20k worth of work and that will appraise for 100k.