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Updated over 5 years ago on . Most recent reply
IN the BRRRR method, what is the purpose of refinance?
Why not just rent and then repeat? Is the purpose to get an appraisal and see what the new value is?
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- Tax Strategist| National Tax Educator| Accepting New Clients
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Originally posted by @Robert Amrhein:
Why not just rent and then repeat? Is the purpose to get an appraisal and see what the new value is?
You refinance it into a more conventional loan.
Most people use hard money for a BRRRR which means 10% interest normally only on a short term loan 12 months often.
So you can't keep that loan- you use it originally because the property won't qualify for a normal FHA / Fannie/ Freddie type mortgage.
So you use that short term loan so you can buy it, renovate it..then once it's in financable condition.
You refinance it into a standard long term loan- and hopefully are able to get a higher value so at the end you have $0 tied up in the deal.
