Using the BRRRR method and all related fees.

[William Davis]

So, I'm new to the game, and I don't really know what I should be doing when it comes to actually executing the BRRRR method, its one thing to know it and study it, but another to actually do it. I have a few investors ready when I get a deal on a home. Specifically in LA, property prices are ~300K and I won't be able to get all that from investors. Should I go to hard money lenders for the rest or keep looking for more Private money? Also, what legal work has to be done when I do get tenants? I have a very good understanding of how the BRRRR method works, but I don't quite know about all the ins and outs of what the property needs to become a good rental. I would be splitting the property with a parter for my first property. Any info about the nitty gritty stuff would be very much appreciated.

[Bob Smith]

David, cudos to you for learning about the brrrr method. I am still trying to Perfect the method.

Since I have owned property, developed property, flipped and held property for long enough to tell a great story, I have friends who lend me money based on my experience.

I say this more to contrast what I am doing with what your trying to do.

For me, I borrow 100% of the purchase price from private money. Then, I make the repairs and rent the property. For me, refinancing opportunities are changing in that I can get a commercial bank loan 5.75% with 20 yr amort and 80% of the appraised value. You should be able to use Visio or limaone, etc.
For the refi, they will lend 70% of appraised value on a 30 yr amort. Your rate will be about 7% And you will need a debt service coverage of 1.25 or so.

For this to work, you need to Richard at 70% of current value and then make improvements which should add $3.00 in value for every $1.00 spent.

Additionally, if you cannot promise the investor that you can get the refi, then you will probably need to sell the property to someone who can. Your investor should not care whether you sell or flip.

Hope this helps