1st Deal BRRRR confusion

[Kodi Floyd]

I'm trying to get all my ducks in a row and set up some exit strategies for my first BRRRR. I'm turning a SFH into two apartments that rent for $1600 total. Purchase is $50k, rehab is $35k, ARV is $160,000. I have a hard money lender that s recommended through BP that is willing to do business with me, however, I am having issues finding a bank that will Refinance or allow me to pull equity out of the house once it's done. Every bank I have spoken to shuts me down once they hear that I am not living in it. Am I missing something here? How is everyone that utilizes this strategy pull money out of these rehabs?

[Andrew Kerr]

@Kodi Floyd are you buying the house in your name or an LLC? Conventional lenders don't like to lend to LLCs. You would have to transfer it from the LLC to your personal name for a traditional loan refinance.

Also keep in mind that you might be providing too much detail to lenders. Most conventional lenders don't understand investing and things like house hacking or BRRRR. When I do deals, I leave out all that extra stuff. I just say I am trying to refinance an investment property, here are the basic details - need a cash out loan for X, and it should appraise for Y, and here is the estimated rental income.

Then some lenders require seasoning, they wouldn't let you do a refi or cash out refi at the higher appraised value till after a set period of time. 6 months is common.

At first glance, if you are into the property for $85k and it is worth $160k, even if you borrowed $100k you are at 62% LTV, it seems like that would be easy to get done.

There are also a lot of other factors like debt coverage ratio, your credit score, your income, do you have adequate reserves, etc. But those are my quick thoughts.