Question on Refi as part of BRRRR

[Jennifer Jacobs]

Hello everyone! I am relatively new to the BP site, and I have to say I have been loving all the information and personal experiences available to learn from! I recently got my Realtor license, no deals just yet but a few in the works. I currently have one SFH rental.

I have a question regarding refinancing after renting a property.  Wouldn't the refi skew the rental numbers and income, as it would cause the mortgage payment to go up?

I currently have two properties, a primary and a rental. I am looking to sell the rental-tenants in place-to cash out. I then want to invest some of that money into my current home (new carpet, paint) to rent out. I would then like to refi my current home to go towards a new primary with the cash from the sale of the first property. However, in looking at the BRRRR method, wouldn't refinancing the home after renting skew the numbers and alter your profit? Am I missing something here?

Given that the home I want to refi is currently my primary, it seems to me that refinancing before we rent it would be an easier option, just because it's easier to refi a primary than a rental.  However, I am just curious how the added cost of the refi can be figured into the rental costs if you have not yet refinanced when you begin renting, as will be the case in our next rental.  Any thoughts/comments/input is greatly appreciated, thank you!

[Chris T.]

welcome to bp @Jennifer Jacobs

Yes, you're absolutely correct. IF you can refinance and capture more of the equity, your monthly P&I will be higher. So that's a factor you need to decide if refinancing makes sense at all. And your monthly rent more than covers your P&I and other costs such as property taxes, insurance, CAPEX, vacancy, repair costs, management company etc.

You need to decide

1. What your ARV will be ?

2. How much equity will you have?

3. Using a 70% LTV, and check if the monthly rent will more than cover everything.

check out the brrrr calculator