Question on refinancing a property after rehab.

[Joe S.]

So on the BRRRR method the investor is supposed Rehab the property and then rent the property and then refinance the property. After the rehab the house is going to look the best it will probably look until it is rehabbed again one day down the road. If you put a renter in there and then try to refinance it the appraiser could look at the mess that the renter has created and give you a lower appraisal possibly. Are there any refinance programs that has the ability to appraise and start the refinance prior to placing a renter in it?

[Jon Kelly]

@Joe S. the purpose of renting before refinancing is to prove you can get at least market (hopefully higher) rents. Appraisals for investment properties often include the income approach and the sales comparison approach. 

There's also a timing benefit if your lender requires a 6-month+ seasoning period. Let's say you complete rehab within 2 months but you can't refi until month 6. You want to place a tenant to collect rent beginning in month 3.