Best loan to pull money out of a BRRR.

[Kyle Fraser]

I recently did a BRRR on a property. I used all cash to purchase, rehab, and now it's rented for $1250/month. 150K invested total, house should appraise around 195K. Today, I met with a bank to discuss loan options to pull my money out for the next project. These are their conditions.

1) Must have the property for 6 months to get an appraisal otherwise they use the purchase price to loan on. 

2) Only loan 75% loan to value on appraisal (Which is fine)

3) Can only use 75% of the rental income to calculate loan payment coverage

4) Can not sell property to family member then transfer over to LLC. (Trying to find a work around for the 6 month waiting period.)

5) Heavy loan and finance fees associated with borrowing. 

Who has a proven loan system to use for the BRRR process that involves financing? What is the most cost and time effective way to handle a BRRR?

[Amit Kal]

Originally posted by @Kyle Fraser:

Originally posted by @Amit Kal:

I’m closing a loan now with JP Morgan Chase.
70% LTV, 30-year fixed @ 4.875%. Very low fees since I'm private client and it's a typical Fannie Mae backed loan. Lots of paperwork and will have taken almost three months so be prepared for that.

That is the same rate I'm at on my rental.  Not bad but always could be better! Any yeah lots of paperwork for sure.. I think hard money lenders are the way to go! 

You really can't compare a 30-year fixed with a HML. Each has benefits and drawbacks and of of course you must know when to use one versus the other as they mostly serve entirely altogether different purposes.