Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Innovative Strategies
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 9 years ago on . Most recent reply

User Stats

61
Posts
13
Votes
Warren Bright
  • Cape Town, Western Cape
13
Votes |
61
Posts

A question about BRRRR

Warren Bright
  • Cape Town, Western Cape
Posted

Hi everyone.

So I am trying to understand this BRRRR strategy a bit more, and in doing so stumbled across a question that I have which I hope you can help me answer.

To set up a little scenario:

  • You purchase a property at $100,000
  • Deposit is at $40,000
  • You require a loan of $60,000

To make things simple I am not going to include transfer costs etc...

Lets say you have waited 5 years and your new value of the property is sitting at $125,000.

You then look to refinance at 70% LTV and get a new loan of $87,500 based off current value of the home.

And now my question:

This lump some of money that you receive, is it used to pay off your previous loan of $60,000, leaving you with only $27,500?

or

Do you leave your previous loan and now essentially have two loans to pay off. (If this is the case my query follows). How are you able to keep BRRRR'ing if you have multiple loans and only earning one set salary. Surely you wont be able to qualify for all those loans?

I am just a bit confused and would love an explanation.

Greatly appreciated!

Most Popular Reply

User Stats

232
Posts
95
Votes
Nazz Wang
  • Investor
  • Maui, HI
95
Votes |
232
Posts
Nazz Wang
  • Investor
  • Maui, HI
Replied

Warren, so now you'd better find a place to invest that 27500 that will give you higher return then your mortgage interest, right?

You only took out 60000 for the original property, the extra 27500 is for some other property, right? So, don't let that money burn a hole in your pocket and don't spend it on a tropical vacation. Invest it wisely.

Loading replies...