West Michigan banking ?

Question

Hi everyone,

I am looking for a bank in the SW Grand Rapids area that loans on the "brrrr" strategy. The banks that I have talked with want 1 full year of ownership before Refi.

Thanks for the help,

Tyler Lyons · Answer

Hi @Nick Watkins,

I was just recently calling around to banks asking this same question! In one of the more recent BP podcasts (ep 237 with Ian Reeves), he talked about doing just what you're looking to do; buying a property and fixing it up quickly and refinancing it out at appraised value within a relatively short window and not waiting the whole year. If you could access some of that equity you created quicker, rather than waiting a year, then you could scale your portfolio much faster. This guy put together a portfolio of like 60-70 doors in only a couple of years doing this.

I talked to three different banks and all three said that they could do only loan to cost and that they wouldn't be able to do a loan at appraised value until a year has passed. The guy I use for my commercial loans works at small, local credit union and he's able to draw up some creative loans and even he said that his bank won't allow him to do this.

Like @Tim VandenToorn, I'm putting them on a commercial loan for now. In the future, once a year has passed, I'll probably look at refinancing into a 30-year fixed rate loan for some of the properties and pulling out some cash.

Sorry that this wasn't more helpful, but just wanted to let you know that I've ran into the same thing and I'm not sure if there is a good way around it.

Tim VandenToorn · Answer

Nick, When I refinance on a BRRR strategy I do them commercially.  There are no seasoning requirements, but the loan terms are not as favorable as a traditional loan.  Due the the complexity of my portfolio commercial is the route to go for me.  Unfortunately I can't give you advice on a traditional loan.  I am surprised by the year long requirement though.  I have heard investors refinancing after as little as 3 months to 6 months.  I will check around.

Nick Watkins · Answer

Thanks Tim!

My commercial lender will only loan to original purchase price, I am looking for appraisals value have you found this?

Courtney Sorrell · Answer

Tagging @Tim VandenToorn- any ideas?

West Michigan banking ?

Most Popular Reply