Reply from lender on BRRRR

[Ryan Myers]

Hey guys comments please....gave my lender a scenario and he came back with this, definitely going to talk with others as well

Good Morning Ryan, typically when we are valuing properties that a member has purchased and renovated we look at the original purchase price plus the renovations

to a certain extent. IE if you buy a house for 50k and put 20k we would say the house is probably worth 70k. Now if you buy a house for 400k and put 400k into it, that house would not be worth 800k. Now in your scenario with an appraisal we would look at the

appraisal value compared to the cash spent value and decide if it is reasonable. For Example if you have 70k into the place and the appraisal comes in at 100k, we would not lend you 80% of the 100k as we would end up having the total price of the place plus

another 10k financed on our end and would then be carrying the risk entirely. Long and the short of it is unfortunately it varies by the situation and I cannot give you a definite answer based on the knowledge we have today. Thanks!