BRRRR- Refinance Strategy

[David Prince]

Good Morning, 

Im new to the game in the Chicago market and looking for some insight around BRRRR strategy. I understand the creative funding for the purchase and reno but curious about the refinance aspect. It seems as though most of the posts elude to this being conventional financing terms through banks or other. Is that typically the case?

And what are the typical terms- 80%LTV and personal credit history or is this tied to a business entity that doesnt rely on personal credit? Im sure this varies significantly but looking for trends or general guidelines to wrap my ahead around the end-to-end strategy.

Thanks in advance for your insights. 

[Michael Facchini]

It really does depend on the property type (condo, single family, 2-4unit, etc) and loan amount (Fannie/Freddie conforming loan limits or above), but as @John Leavelle stated it can be 70 to 80%. If a conforming 1-unit, 80% is often very doable. We can look at credit as low as 620, but typically you want to be above 680 ideally. Residential loans do not allow LLC's, and whether the income is derived from a self-employed business or you're employed, it must meet the Debt-to-Income requirements of conventional financing. Now, we do have options for investors where the income requirements are a little less restrictive, but then of course you fall into portfolio financing with higher rates.

Hope that helps!