BRRRR Refinance in higher markets

[Account Closed]

I have questions about refinance while using the brrrr strategy. Once your getting ready to refinance, what kind of loan would you get? For example let's say I purchase a property for $300k and its value for $450k (this price is normal here in the NYC market) then I rehab, rented and now I want to refinance and I paid that property in cash, so there is no mortgage on it. Doesn't refinance mean replacing your old mortgage with a new better interest rate mortgage? But how do you replace a mortgage on a property that doesn't have a mortgage? What kind of refinance would it be? From what I see, you could only take out an equity loan or equity line of credit or cash out equity finance on properties without mortgage. And to even qualify for any refinance loan, wouldn't you need to keep your full time W2 job for 2-3 years? Because those banks require personal income and income tax returns. Again this is NYC I am speaking of so trying to refinance a $300K home that's value at $450k, wouldn't you need a $70k per year job for at least 2 years on your income tax for banks to even consider refinance? This is the only road block for trying to use the BRRRR strategy in NYC or other high market cities that I Seen. Please correct me if I'm wrong and share any advice that can help me and other people in high market cities understand in using refinancing while brrrr.

[Shaun Weekes]

@William P.

If your home is free and clear doing a cash out refinance is still a mortgage.  Anytime you borrower money against a home it's considered a mortgage or mortgage line against the home.  

In regards to income everyone will have a different scenario.

Example:

If client A makes 120k per year but has 5k a month his/her DTI will be 50%

If client B makes 120k per year but has 6k a month his/ her DTI will be 60%

If client C makes 120k per year but has 4k a month his/her DTI will be 40%

All these clients make the same amount of cash monthly but they're financing options are very different.

Overy 50% DTI conventional financing is out of the question but FHA is still on the table. Over 60% your only options are VA and portfolio type loans.

Under 49.9% you have a shot at conventional financing but your C.I.A. ( credit, income assets ) has to be excellent.  Under 45% it's gets easier to qualify.

There's literally millions of combinations so you're going to want to consult a broker or loan officer that has experience with investment homes.

I hope this helps and have a great day Sir.