BRRRR Questions on financing

[Jay Dekker]

Hi everyone, I have a couple questions when it comes to the BRRRR strategy. Lets say I buy a SFR for $70,000 and pay the 20% down to Bank A. I get a Hard Money loan for the $30,000 needed for renovations. After I wait the seasoning period of 6 months, I refinance with a ARV of $150,000. Am I able to refinance with bank A and cash out refinance to pay my hard money lender and get my 20% down back? Also, am I able to get another loan from bank A soon after? And with these numbers, does this sound like a good deal? Or is there a different approach someone would recommend me doing with $20,000?

Also, seller is willing to do seller financing. What scenario would you rather do?

[Andrew Postell]

@Jay Dekker I would suggest a different approach to what you described.  If your purchase price is $70,000 and your renovation is $30,000, that's a total amount of $100,000....I would suggest getting a Fannie Mae renovation loan at 15% down.  It is a 30 year fixed rate product, that you don't have to refinance out of if you don't want to.  Your description above has you paying closing costs 3 times.  It also might be hard to find a hard money lender who would be in 2nd position in the loan structure.  The Fannie Mae loan will allow you to roll the renovation costs in, your 15% down would be based on the total amount ($100k) and you only close once.  Feel free to ask more questions if you need.  Thanks!