Delayed financing and BRRRR

[Sean Harris]

I will be buying properties soon and implementing the BRRRR strategy. The thing is, i will be using a HELOC for the full cost of the home plus rehab. To make my payments lower on the HELOC I was thinking of using delayed financing to pull some money out to pay down the HELOC making the monthly payment lower and then once the rehab is completed then refi to pull the remainder of my capital out. Does this make sense or has anyone done this? Thank you

[David Bergmann]

I haven't done the delayed financing into a refi, but I would think the biggest downside to this approach would be the double closing cost. Another thing I wanted to mention based on my experience is that if you BRRR using the HELOC as your primary means of financing...the balance on your HELOC at the end of the project will show up on your credit report as revolving credit. Depending on your situation this may lead to a big downward movement in your credit score at the exact time you are needing to refi. Just something to keep in mind.