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Updated over 7 years ago, 04/02/2017
Natalie KolodijPoster
Tax & Financial Services
Pro Member
- Accountant
- Charlotte, NC
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BRRR timeline question
Hey guys,
I want to make sure I fully understand BRRR and that it's possible to utilize in the situation which I'm looking into...
I'm looking at small cottages in Florida that are in the 30-50k range that rent for around $800
My example:
- Purchase a $31k home with a hard money loan
- (Is it likely they will loan $46k to include repair cost, likely not correct? )
- I spend $15k on renovations to the home
- Rent the home
- Then go to a bank and say "I would take to take out a mortgage for this property based on current appraisal?"
- Someone was telling me they would use recent sales price for 1 year and not appraisal value?
- Is this true? Do I need to hold the home for a certain time before I can apply for a normal 30y mortgage on it based on it's newly improved appraisal value?
- I also was told they would old loan 70% of value - is this correct?
- If my ARV is in the $85k range
- Based on the 70% I could finance the house for $60k
- Pay off the hard money loan at around $35k total
- I could then utilize the $25k remaining equity to put toward next project
This is my current understanding/ questions/ things I'm not sure on. Any input/clarifications would be greatly appreciated.
Thanks!
Kolodij Tax & Consulting
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