BRRRR method explained

[Jonathan Ruiz]

can someone explain the re-finance aspect of the BRRRR method? and if you can provide it with a real world example that would be great..i work better with numbers :)

[Christopher Phillips]

@Jonathan Ruiz

When refinancing, lenders will do up to 74%-75% of after rehab value (ARV) based on an appraisal at the time.

So, if you had an ARV of $300,000 you can refinance at 74% would be $222,000.

In order to get your initial investment cash out, your purchase price and rehab $'s would need to be less than that.

In order for BRRRR to work, you have to purchase the property at a decent discount.

In this example, say purchase price is $150,000 with 10%-20% down, plus $50,000 rehab money using a hard money lender.

Then when the work is done, you rent it out.

Then refinance the home at $222,000 (74% of ARV) at a traditional lender, pulling your initial 10%-20% down payment out so you can then invest elsewhere while collecting rent money on the home.