BRRR

[Ray Agosto]

I found a great single family house in my town. I wanna buy it and use it as a rental so i can become a landlord. I wanna do the BRRR process as in Buying it , Rehabbing the little things , Rent it out locally , Refinance it from the bank.

Now here is where i need help?

Each step

Buy : where can i find  PML that will lend me enough for the buying of the property , closing costs and the little cosmetic stuff ?

Rehab : Should that be out of pocket or do i include that in the numbers for the PML 

Rent : I know i could rent it as a college rental ( not to for from the college campus )

Refinance : Would that be just a normal loan ? or a mortgage loan of the amount i took out from the PML ? 

[Derek Daun]

For refinancing, you'd be looking at a conventional loan, but would be paying a 1/4 to 1/2 point higher on the interest rate due to it being an investment property. 

For a true BRRRR, the goal is for the property post rehab to appraise high enough that you can take out enough money to fund your next deal as well as paying off the original loan. Most big banks will lend 75% of the appraised value for a cash out refinance. That 75% number is the key to understanding if you have a good deal, a mediocre deal, or no deal.

(Post Rehab Appraised value) X .75 - Loan value = Cash out