BRRRR Financing Question

[Mark Butler]

Quick question:  A year ago, I bought 3 SF rentals for around $125K each (in Kansas City). Each property is on a 15 year note with a traditional loan and they cash flow around $200/mo for each unit.

I was planning to pull my equity out and repeat the process, but my lender said that I cannot extract the equity until the properties have "seasoned". I figured the BRRRR snowball could gain traction faster but I think I financed them incorrectly.

I'm currently planning to buy a small condo and I need to do the BRRRR better this time so I can repeat the process faster. Advice on how to finance a BRRRR property better on the next one would be most appreciated.

[Shera Gregory]

Look for another lender. Each bank, credit union, etc will have their own seasoning rules. Check with the smaller banks and credit unions in your area. You may find that the lenders that allow for no seasoning (or very little) will only offer you a commercial loan that will be amortized over 15, 20 or 25 years but will have a balloon payment due in five years (at which time you re-fi at a higher interest rate). If that's the case be sure to ask what happens at year 5. Some will require that you basically start the process over again with new fees, financial statements, etc and others may just roll over to a new interest rate.