BRRR Strategy - Refinance Question

[Michael L.]

Hey there BP community,

I'm getting ready to tie up a house in phoenix with hard money and i'm having some issues with the refinance part.

Here's the deal:

Purchase price: 90k

ARV: 135K

Rehab costs: 5k

The issues that i'm coming up with after talking to a few lenders is that in order to lend on the ARV I need the property to "seed" for 12 months. Otherwise they will only lend on the purchase price which leaves with a lot of cash tied up and a high monthly payment for my hard money loan. The hard money loan will cost me about $850 a month and with my rental at $900 I'll probably be neg. cash flow with expenses and such.

In my opinion the numbers work well even with a flip strategy but i'd like to hold on to this for long term since the neighborhood is nice and my goal is to build my rental portfolio while I work my regular job. 

Please let me know if you have any suggestions on how to cash out refinance out of my hard money loan using the actual value of the house (ARV).

All your help is greatly appreciated. 

Cheers