Cash out refi queston

[Paul Chae]

Hello everyone. I hope everyone who's reading this is all well. I have some concerns to share with you guys.

I've posted a similar question before, but still haven't found the answer yet, so here I am writing this again.

I am a first time BRRRR investor living in NYC.

I purchased a single family rental in South Jersey, and its rehab is almost finished.

I have a question in regards to cash out refi. In typical fashion of BRRRR, I tried to get the property refinanced at 75% ARV. The problem is, ARV is about 82k-90k(purchase price was 45k, all in cash. This ARV is based on RE agent's opinion and comps), which not many lender would do cash out refi for. I realized the bare minimum that they think is worth for work is about 100k. But I managed to find the local mortgage lender who was going to do it at pricey cost and interest. I was going to go for it anyway, to stick to BRRRR strategy. Without refinance, what's the point, right? But the mortgage lender closed the program recently due to Coronavirus. Now, I feel like I am stuck. But I am not panicking or anything, but just trying to look for other creative way to get through this. Would you sell it if you were in my shoe? How can I keep going? I really want to do buy and hold rather than flipping or anything. What I hope to do is to learn how to repeat investing with the initial capital. I'd greatly appreciate all of knowledgeable advices and information. Stay safe everyone.

if anyone knows NJ lender who does cash out for under 100k, with just one month ownership, Please let me know!

Hoyoon

[Joe P.]

Most banks required six months seasoning before a cash out refinance and 75% was the upper limit of ARV -- that was before coronavirus.

That market has dried up considerably, so you either need to go with a less reputable bank or HML who will refinance you at not so great terms, or hold until the market goes up.

If the unit is rented and making money, hopefully your need to refinance isn't so strong. I go in thinking that I will need to hold onto the property for six months at least, and factor in the costs. BRRRR is a fantastic option but the numbers going in need to be realistic for time and maybe a good refinance option, not the best one you can conceive in your mind.

Push comes to shove, if you need your money back or out of the deal immediately, start the wheels on an exit strategy, either selling it to someone, maybe doing seller financing, rent-to-own, etc. Doesn't sound like you are there, but have your ducks in a row before push becomes shove.