BRRRR - Short term loan - Refinance

[Fredric Sjöberg]

Hi Everyone! 

I´m new to this community and very excited to have found it! My brother and I are just learning and have started to look for our first investment property, we are focusing on the BRRRR strategy in single/duplex family houses back in Sweden. I have a pretty good idea of how this strategy works.

I´m sure this has been mentioned in Podcast, books and blog posts before, I was hoping that someone could just clear the fog quickly and before I dive deeper into the strategy. 

My question is: 

Do you, or does it matter how you get the money in the first place to buy your property?
Can you use the bank or is it better to find a hard money lender(?) to finance the place to buy? And why is this?  

My brother and I are planning to use the regular bank to finance our first purchase, we pay 15% downpayment. 
- rehab it
-rent it
-Appraise and refinance with the same bank
-repeat. 

Are we missing something here? is there a downside with using the bank to first finance your purchase? 

If you can please explain it or refer to blog posts, videos etc. I´m looking to buy the BRRRR book and I´m sure it's covered in that.
 

Thanks in advance 

[Andrew Postell]

@Fredric Sjöberg as mentioned above it's important to speak with lenders about this.  Our answers here in the states might be TOTALLY different than the answers you have because your lending rules might be different.  Some of our loans here come from the Federal Government.  And some come from the banks themselves.  So the loans here might be different than the loans there.

We use Hard Money here mostly for 2 reasons: the ability to close quickly and the ability for them to lend to us with NO downpayment. Meaning, they will lend to us based on the ARV....let's use 75% of the ARV for an example here. So if I can buy and rehab my property at 75%...then I come out of pocket $0.

But Hard Money is also a short term loan.  So I MUST refinance.

So if you have a lender in your country that can buy and rehab a loan with NO out of pocket costs to you because you purchased it so inexpensively, then there's no need to even touch hard money.

I hope all of this makes sense.