Live-in BRRR Strategy, refinance clarification

[Jeff Jackson]

Hello, I would like to apologize in advance for the lengthy back story, but Im on my first rental property and not sure which pieces will be of value for a good answer. About 1.5 years ago I decided to make my first home purchase in Denver, CO. It is a 1 bedroom condo in a growing area close to down town so has had decent appreciation over the small 1.5 year time, not including my own rehabs. Being it was my first property when just moving to Denver, I didn't have a lot of initial capital so took a while with the rehab and worked for my situation at the time anyway. I am to the point where the rehab is done and I am looking to refinance to jump on to that next one. I even have a renter lined up making just shy of the 1% cashflow mark. It should be noted I am pretty close to hitting the 20% equity mark to drop the PMI, which would obviously help with the cash flow.

With that said, my question is at the refinance. I have discussed my intention with my current mortgage company and they suggested I wait to rent and refinance after I hit the 2 year mark (of primary residency) because I would be able to keep my low 4% rate (conventional loan). I have the debt Id like to cover from the remodel, have a small down payment for the next property, as well as drop the PMI which I think is feasible but would my new loan truly stay the same and does it work that easily? Not sure if this is best practice for the investor (because from the books Ive read here I haven't heard a single person say they waited 2 years), or in the best interest of the mortgage company? At this point with only 6 months left to wait, increasing interest rates, as well as higher debt load from remodel, it may benefit over the long term mathematically with the secured lower rate, because the margins in Denver are tough. Also, being a one bedroom condo really caps the potential. Should I pull the trigger now on the refinance as I have everything teed up ready to go or do people wait to a 2 year mark in this situation?

Really appreciate any positive feedback!

[Matt M.]

How are you pulling cash out and dropping the PMI if you are barely at 20%?

Forget your current mortgage company. Do you have at least 5% down to put on the next place without the refi? Can you qualify for that? I've got a lender that will do 5% down and even 0% down if you can qualify.