Best Type of Initial Loan on a BRRR Deal

[Ian Livaich]

Hey everyone,

I am analyzing my numbers on a triplex in New Jersey as a BRRR and may submit an offer this week. I would be obtaining a loan for the purchase price and paying cash for the repairs. After 6-12 months, I would like to do a cash out refi if the appraisal is where I need it to be (I am currently researching comps).

Without getting into the nitty gritty details of this particular deal, I generally would like to do know what type of loan is best for the initial short-term loan in a BRRR deal. Some have recommended a short-term rehab loan, but I would like to avoid this as I have the cash for repairs and want to avoid paying the higher interest rate and fees associated with that type of loan. The lender I am working with suggested a 5-year ARM with interest only payments. Does that option make sense?

What are some other possibilities for the initial short-term loan if I am looking to do a cash out refi after 6-12 months?  I am looking to keep my loan costs as low as possible.  

Thanks for your time and input,

Ian

[Tarik Turner]

How much is the property worth as is? 

Having the cash for the rehab work is great but if you leverage your money would that cash be enough for a second investment property down payment? 

There are a number of short term interest only products that will only cover the purchase price but those rates are typically still going to be a bit high