Help! How to Refi Fix & Flip?

Question

Hi everyone, I've been fixing and flipping houses for 3 years, but I've been hearing about the BRRRR strategy recently.

I have an incredible property in a booming neighborhood on the edge of uptown Charlotte, NC that's transitioning quickly. I would like to hold it because the sales prices are skyrocketing, but I don't want to tie up capital to limit me from other opportunities if I go the buy and hold route. Here's the scenario: I paid $170k, spent $85k in renos, and have approximately $20k in holding costs, fees, etc. The ARV is currently $350k, but continues to rise 15% - 20%+ per year. I can currently rent it for $1,800 / month or probably double that on an app like AirBNB.

How does the BRRRR strategy work on this scenario? Will a lender take a percentage of the ARV on the refi and I would not have to put capital down, or do they take a percentage of the current money I have into it for "skin in the game?"

Thanks for any advice you can offer!

Whitney Hutten · Answer

@Tyler Lee congrats on the flip. You may be best served actually flipping this property as the rents will be only ~.5% rent to value. Not a great scenario for a BRRRR. In theory, you could take the property to the bank and put a loan on it, and the LTV could be your choice. The catch will be the bank will be that the bank will credit you 75% of the $1800 rents to cover expenses...$1350. Anything above $1350 will hit the debt side of your balance sheet. I'm not convinced that your property will underwrite well using these numbers. Have you run this through the BP calculators?

Jimmy Lieu · Answer

This is a great question, I want to know more about this as well.

Help! How to Refi Fix & Flip?

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