BRRR Method Question

[Kim Cooper]

After I Buy, Rehab and then Refinance, can I really take that refinancing money and place it into another property? I thought if you refinance a property there are restrictions on what you can use that money for.  I thought you could only use that money for THAT specific property again.  Do some banks have certain restrictions and some do not? Or, is that money free to what ever I want with it, whether I purchase another property or buy a million shoes? (just an example, I would never buy a million shoes). 

[Kevin Sobilo]

Yes you can use that money for anything. However, if you state to the bank what you plan to use it for they may wish to make sure you do that. There have been some changes in reporting requirements for lenders. So, if you state you intend to buy another property, they may wish you hold that money until you find a house to buy. So, my advice is to be very general if they ask what the loan funds will be used for.

Also, you may have skipped 1 step in the process. BRRRR (Buy Rehab RENT Refinance Repeat). So, you will want to get the house rented if possible before refinancing. Showing rental income can only help justify an appraised valuation (assuming you get market rent) and also income to repay any loan. It is also good to have it rented so that you know what rent you can get and don't try to borrow too much and end up with negative cash-flow.