Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 6 years ago,
BRRRR Refinance Step Help
Good Morning Everyone, I have been putting this off for a little bit because honestly I am kind of embarrassed but I realize that to learn I need to actually ask the questions that I need answers to so here it goes.
for the refinancing portion of the BRRRR strategy I for some reason cant seem to wrap my head around how all the numbers work. I know that it is pretty straight forward but I think I am overcomplicating it.
So lets just say $250,000 is the purchase price with down payment of $50,000, $50,000 is the rehab cost, when done it would sell for $450,000. So I purchase, Rehab and rent out the property, now the seasoning period for the loan is up and now I can refinance. From there the bank appraises it and says it is worth the $450,000 so I can refinance it to 80% of the appraised value (80% is what my bank will refinance at). That leaves the refinanced loan at $360,000. THIS is where my brain gets stuck for some reason.
Is it $360,000 - $250,000 = $110,000 equity now in the property??
This is why I am embarrassed because I know it is a simple concept but I just cant seem to get it.
Thanks!