BRRRR Financing and Refinance

[Alex Goon]

Hey BP,

I had a question about the BRRRR method that I was hoping that you guys could help me out with.

I have about 25k in savings and I work multiple low-paying jobs. I plan on using a hard money lender to finance the purchase and renovation on my first deal. I was wondering what the best course of action would be if I refinanced at 75% of the LTV but it wasn't enough to cover the amount borrowed from the hard money lender. The only solution I can think of would be paying for the difference out of pocket.

Do you guys have any tips?

Thanks!

[Account Closed]

When evaluating a fix and flip deal, rule of thumb of offer price is 70%*ARV-rehab. After 75% refinance to pay back the hard money loan which could be 90%*purchase price plus 100%*rehab, you should still have a little over 5%*ARV left as your profit.