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Updated over 6 years ago,

User Stats

41
Posts
13
Votes
Amadeus Hladun
  • Investor
  • Lethbridge, Alberta
13
Votes |
41
Posts

BRRRR Refinance Step Help

Amadeus Hladun
  • Investor
  • Lethbridge, Alberta
Posted

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!

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