When to Refinance on my BRRRR?

[Jobee Vincent Buenaventura]

Hey everyone! New investor here in Bergen County NJ and I got a quick BRRRR question: When is the right time to do a cash-out refinance on a property?

Details: I bought a 2-family with 1 tenant on the 1st unit in September. I did some repairs and moderate renovations for the second unit and it’s currently vacant. Should I refinance before or after I get the second tenant?

And Anyone know of any good banks or lenders in my area that are familiar with these sort of things? Thanks all!

[Jason Shackleton]

Hey @Jobee Vincent Buenaventura You are likely better to have the property fully tenanted prior to your appraisal and refinance. Having signed leases will help with the appraisal process. The rents will not then be estimated they will be current and accurate. That being said before letting the tenant into the building have professional pictures taken of your renovated unit. Being vacant is actually a good thing as you can now stage to take these pictuures. Get your realtor to pull comps for you too. Put these three thinigs Comps, professional pictures and a copy of signed leases into a package for your appraiser. Essentially doing his job for him. There is no guarantee he will accept it however this will give you the best chance of a max appraisal for a refi. If it's a rental I could help with a refi. I deal with private investor loans with a little higher interest rates.

Best of Luck!

[Jobee Vincent Buenaventura]

@Jason Shackleton yes this is a 2-family that I am planning to have both units rented out. Paying a mortgage of 2063 and I’m projecting $600/mo in profit of rent from both units, but we’ll see once I get a tenant in. Houses in my area have been rising at an alarming rate the past several months so I’m hoping to gain some bonus equity from it.

[Johnathan Boyle]

@Jobee Vincent Buenaventura I would get the second tenant in there. I have had plenty of appraisers try to dispute the rents I can get for rental properties and that usually messed up my appraisal. However, if I get the tenant in there and show proof of rents, then it is much harder for them to dispute. Makes it easier for you. What type of bank are you looking for? Full doc or low doc? And what specific rates and terms are you looking for? Overall, I think you should have a second tenant in there before you refinance because it makes it easier for you with the lender. 

[Jobee Vincent Buenaventura]

@Johnathan Boyle sorry, I’m not sure what you mean by full doc or low doc. I’m going through everything the first time so I’m unfamiliar with this part of the process.

[Johnathan Boyle]

@Jobee Vincent Buenaventura Sorry for the delay. I thought I responded. Full doc means they do everything looking at your W-2, paystubs, credit, etc. vs low doc is they just want to see you have the money to close and it appraises (There's more to it but overall it is a much simpler process.