BRRR Strategy question, the last R

[Andrew Halbert]

I know this topic has been discussed, I am clear on all the steps in this method, however I am not clear on how to make sure I will be able to refinance? I know not to expect more than a 70% LTV from the lender, however I am concerned that as I progress with more properties my DTI will hold me back from being able to refinance through conventional refi. I just watched Brandon's webinar and I understand banks that do portfolio loans are a great option.

The real question is how do I prepare the best way possible for the re-finance part.  It seems incredibly risky to take on private money, or even Hard money in "hopes" of being able to refinance.  If I could not refinance, I imagine that could be devastating.  Am I over thinking this?  

[Brent Coombs]

@Andrew Halbert, I don't believe you are overthinking this (yet). But if you are relying on the third R just so you can convert a hard money loan into conventional, then it is SUPER-important to make sure you have at least 30% equity in the deal once the HML dust settles ie. bought well under market value AND easy to add significantly more appreciation than what the rehab will cost.

Otherwise, you will never get to the FOURTH R (= Repeat), which is SUPPOSED to be the reason for the Refi - not just converting it into a conventional loan. The strategy is: BRRRR, meaning you're aiming to cash out enough to put ANOTHER deposit down on another property as well! Savvy?...