Commercial vs Conventional Loan for BRRRR?

[Dan Turkel]

I'm finishing up renovations on a property I've owned for a little over a month that I intend to BRRRR. I'll be all in around 77% ARV. As I look to refinance it, I'm debating on which option will make the most sense.

1. I go with a commercial lender with an adjustable rate mortgage locked in at 4% for the first 5 years. My local portfolio lender will do 80% LTV and it'll take about a month to do the refi. They have no seasoning period.

2. I wait 5 months (because of the 6 month seasoning period) and go with a conventional loan at that point in time. I'd be able to do 75% LTV around 3% interest 30 year fixed.

I'd really rather go with option 2 because of the lower interest rate. Now is the time to lock in rates because of their historic lows. The conventional loan would cost significantly less in interest each month. But by going with a conventional loan, I'd also be locking my money up in this property for another 5 months. I won't be able to take advantage of the velocity of money that David Greene talks about in the BRRRR book. This would also limit me to doing a max of 2 BRRRR's per year which seems to really take the power out of the BRRRR strategy.

As I continue to weigh these pros and cons, I’d love to hear your thoughts on this. Which option would you go with?