Just purchased My first BRRR property. With Cash.. I have a few?

[Michael Beeman]

Hello Everyone,

So, I have been listening for a few months. And, saving towards the purchase of my first property, and discussing my strategy with my friends.. "gotta love the nay sayers"..   lol.. But anyhow, suddenly my mother and my best friend wanted to split  49.99% of my new business and be silent partners but provide capital.  So, with no experience but a wealth of useful knowledge from many books and about 60 episodes of BPP. I have shopped and shopped until I happened upon a very low priced but large single family home. My issue is, it is very large, and I know from having rented in some of these homes before when I was in college that many of them get converted into multi-family housing. So, if I do this all with cash. And by the end i have a total of 50-60k cash invested into this property. But it's "cashflow" is about 1500/month in the black. How long before a bank would likely refinance so I can draw my cash back out and start my next project?  And is there a certain bank that would be more likely to work with us on this project. 

[Tony Castronovo]

Hi @Michael Beeman. When you use all cash and then try to refinance it is considered a "cash out refi". This means that you could be looking at 6-12 months of seasoning. If you are looking for 75% LTV then you need 12 months. If you want to refi at 6 months many lenders will base the loan off the purchase price rather than the ARV. Since this contradicts the BRRRR strategy you are likely looking at 12 months.

Now if you are refinancing to replace an existing loan then there are plenty of lenders who will refi you immediately. That is what I do. I acquire using HML and then refi in usually 60-90 days. You can do the same thing using private money, so long as it is a promissory note, secured by the property.

I'm certainly not the authority on this topic (just sharing my experience).  There are many threads on this topic and several lenders on BP that could offer further advice.