How to manage BRRRR financing the right way

[Noah McPherson]

Hey BP!

So let me get this straight. The HMLs I've been talking to on the phone offer me loans for a 12 month period. I plan to do a lot of the rehab on my BRRRR, so let's say it takes me 6 months to get it rehabbed and rented and 6 months of seasoning period with the tenant living there. I wouldn't be able to take 6 months on the rehab right? If I took 4 or 5 that seems a little sketchy still. How would you guys recommend I manage the financing? Go for an 18 month term with the HML? Find a way to get it refinanced faster? Any advice would be great. Thanks!

[Ashley Cross]

Speak to the lender that will be completing the refinance. The 6 months starts the day you acquire the property not after the rehab is done. Also, keeping the hard money loan that long will be very expensive and it will certainly eat away your profits. When I do my Brrrs I always target 6 months. I guess it depends on how extensive your renovation is but if its mostly cosmetic for 1-4 units it should be done in 3 months.