BRRRR VS Renovation loans

[Denver Chavez]

Hello BP Community,

I recently purchased a single family property with a conventional loan that I'm currently developing (In the planning stage) into a 3-4 unit property. I'm trying to decide if I should fund the renovation up front with my own money, then essentially refinance and BRRRR the property on the back end to pay myself back. The other option I have is to refinance the property now with a renovation loan and basically use the ARV of the property to fund the renovation. This would mean I would be paying off a bigger loan based on the amount of money I borrow for the renovation. Sort of a BRRRR in reverse. If any one has any experience doing either of these and can shed some light on which would be the better long term play, I would really appreciate it. The only difference I can see is that the Reno loan would be a higher interest rate for the time being, but I would think I could refinance in the near future assuming rates come down. The benefit is that I wouldn't have to use my own money for the renovation.

Thank you!

[Brittany Guimond]

I'm not a lender so this isn't exactly my lane (feel free to check me here @Andrew Postell) — I believe Fannie/Freddy updated their seasoning requirements on refinances from 6 months to 12 months, so you would have to bake that timeline and holding costs into your total budget and project plan. I have not done a BRRR myself yet, but I remember when this change happened earlier this year, it threw a wrench into flippers timelines.