BRRRR Question Financing

[Ace Kaspar]

When it comes to the end of a BRRRR, I understand you can not do a cash out refinance within 6 months of buying the property.

If you are taking out a loan, is there still a way to effectively BRRRR? 

I was looking into short term financing and then converting it to long term but honestly, a little lost on that.

Any advice or guidance on this would be great.

Thanks in advance!

[Nathan Grabau]

What you are looking for is the seasoning period on your loan. I have been able to refi convention loans 121 days after a refinance. 

What you can do is get a hard money loan or some type of bridge financing and that is designed to be short term. A lot of the time, between the risk you are taking(you have to refi a bridge loan as it is short term), the higher rate you are paying, and the origination costs, make this not incredibly ideal for funding vs a conventional loan that you cash out refi after 4-6 months. 

You can also go to a private local bank or credit union. They can likely give you similar terms to a hard money lender and let you do a construction loan that is based on your after repair value, that then ams on a normal schedule. Developing relationships with local banks might be one of the most underrated things that you can do to help efficiently scale your portfolio.