Would the BRRRR method work on this STR scenario?

[Stacy P.]

Hi! A newbie learning here! I bought a cabin as an STR in July this year, in an area doing very well...so well that the existing cabin prices have gone up through the roof since we purchased our cabin earlier this year. Land is also scarce there right now but several new developments are opening next year.

Here's my question, would a BRRRR work in this case? (without the rehab...it would be a new build...so BBRRR-lol!)

So, for this scenario let's go with what I currently have, which is a 1,000 sq ft 1 bedroom cabin. Mine appraised for $407K when we bought it. Cabins currently on the market and selling are going for $475+K. But we can stay conservative, and say that a cabin this size will confidently appraise for $407K

Cost to build a cabin - $150-$190 sq ft. So let's say I built a cabin on the higher end at 1000 sq ft. It costs $190000 build.

Cost of land - $70K-$90K. I want a nice lot, so let's say land + cabin build is $280K.

If an appraisal came back at $407K and the bank would refinance at 70%, that's $284K.

If this works, my plan is to find a hard money lender for the build, and refinance with a conventional loan, or even a portfolio lender,when the build is done. Is this possible? Can you do a hard money loan on a build? What are the pieces I'm missing here? What are the risks? 

A little more info about me...I have excellent credit, but a fairly high DTI. My current cabin won't be counted as rental income for another 1 1/2 years, unless I find a bank that will recognize what I have from this year's taxes. I bought this cabin on a HELOC which I could pay off, but I'm choosing to wait a couple of years and use the cash flow from the cabin towards my acquisition goals, for the time being. So, I do have a little cash...I just don't want to use it if I can help it. :-)

Thanks for your input!