My bank let’s me BRRRR without the refinance

[Ryan Betzing]

I’m closing on my second home with a little local bank and the loan product they offer is incredible. Here’s the way it works: I find the deal and bring it to them along with a scope of work from my contractor. They do a drive by appraisal, and if the numbers work out, they fund the purchase plus rehab cost up to 80% of the ARV. They set up a draw for me so the rehab payments are deposited into my bank account at the appropriate times. The loan can be 15 to 30 years with a 5 year ARM, fixed at 6.25% the first 5 years. Here’s the best part - I don’t have to start paying for 6 months. After 6 months, I pay the accrued interest and start making regular payments if I want, or I can defer the payments another 6 months if I need to. Here’s the 2nd best part - all these loans are in house, so according to my banker, I can do as many as I want as long as the numbers work out. Twice now I’ve found a house for 50k, borrowed 65k, then rented at $1,000 a month after a 15k rehab. Works out to about $250 a month cash flow and none of my own money in the deal. Just curious if anyone has a bank that does this? Real estate is awesome :-)