BRRR: Lenders won't use ARV for cash-out refi for a year

[Andrew Gordon]

Basically, I am talking to lenders to get lined up to do a BRRR in the next couple months and everyone I have spoken to has told me that you can't use the ARV to cash out refi unless you have owned the property for at least a year.

If it's been under a year, you can only refi based on the money you have put into the property: the purchase price + the rehab cost. So you can get up to 80% of your capital back, but it's not that great because you are still leaving 20% of the money you have spent in the property. Basically, it's a 20% down payment. Not really a BRRRR as I have heard it described!

So, I was a little surprised by this because it wasn't mentioned in any of the BRRRR books / videos / learning materials I have used. Waiting a year to get your capital back isn't great.

I am currently talking to a portfolio lender at first bank who can refi with the property in the LLC. Fanny / Freddie lenders won't refi LLC owned properties (as far as I know), but I am curious if anyone can steer me in the right direction to a lender that can refi based on the ARV within a year. All lenders I have spoken to say they can't do it.

Thanks in advance everyone!

- Andrew