BRRRR on short sale that doesn't need work?

[Wendy Oliver]

Hi, we are considering buying a short sale that would be ~60k under market value with conventional financing (20% down, 30 year loan). The property is in great shape so we wouldn't need to put anymore money in to it. Could we still use the BRRRR method and do a cash out refinance on the market value even though we didn't have to do any work to it?

[Chris Low]

We've got a similar situation, Wendy. We've been in contract on a short sale since Oct. 2015. We made the offer sight unseen because we were fairly confident there wasn't a lot of work needed but we couldn't verify that because the tenants were being uncooperative and wouldn't agree to any showings. So we took a gamble, made the offer, the seller accepted since no one else had offered since they couldn't view the property. We knew there would eventually be an inspection period and we could back out then if we were wrong about the needed repairs. Finally, after about 60 days, the tenants agreed to a showing. We were relieved to find it needed even less work than we assumed. We knew it needed a new roof and exterior paint, and it does, but that's all we need to do. We plan to BRRR it (or maybe even lease option it) IF the short sale ever closes. I haven't found any lender that says X amount must be spent on it to qualify for a refi. They really only care about the market value at the time you're going for the refi.