quicker and higher interest or slow and lower interest?

[Rigo V.]

I have a property I was hoping to BRRR. I purchased and rehabbed with a HML and I am currently looking to refinance. I have a lender who is not concerned about seasoning offering me 6.5% interest on a 30 yr fixed. I have a bank that wants to see 6 months seasoning but offering 4.5% interest.

My question is  do you sacrifice cashflow to be able to get your initial investment back quicker and invest again or do you wait the six months and maximize the cashflow? 

[Charles Carillo]

@Rigo V.

I would wait the 6 months to refinance and get the lower rate. You are renting it out anyway so the payments should be covered by the rent. I would also check with other banks locally and see what they can offer.

[Michael Ablan]

@Rigo V. - Tough call. Whats your cost to hold the HML over the additional months? Also, how many more deals could you do if you got your funds back today?

[Rigo V.]

@Michael Ablan good questions. The HML interest isn't terrible at 10%. The rental income covers the payment and still provides cash flow after reserves.

The capital that is tied up is from my heloc so my cash is what I am thinking of using to get another deal. If I get my heloc cash back out I prob would still only do the one deal so I am leaning towards waiting the seasoning period out. 

[Theresa Harris]

How long would you be locked into those rates and how much do they charge for refinancing?  I'd personally go for the lower rate.

[Nicholas Covington]

@Rigo V. The quest to ask yourself is if the opportunity cost is worth it. Like you said, your cash is now tied up and you cannot use it to reinvest. The purpose of the BRRRR refinance is to take out your cash ASAP, a lower rate is normally just an added bonus. You can maybe look for other lenders that can maybe meet you in the middle. Depending on the property and other factors, I know some out there that will over about a 5.875-6.250 for a 30 year fixed rate with less than 6 months of season.

[Rigo V.]

@Nicholas Covington any good contacts? 

[Joseph OHare]

I have ran into similar issues.

If you are looking for a one stop shop that will cover the initial purchase and refinance check out Groundfloor.us