My partner and I are in the middle of saving for our first property. I've heard and read lots about the classic BRRR real estate investing method. I'm going to outline my plan, or what I think will happen, and as an amateur on this topic, I want to know where I'm wrong/could use advice.
Our combined income is in the $90k range. We plan to buy in the $300k - $350k range, if approved of course, but in this example we will use $300k. Current plan is to put down ~$25k (first time home buyers). Tad bit of a curveball here, we will be living in the home while renovating - we are contractors with the tools and skills to redo the home, excluding (if) the roof needs replacing. We are looking for 3 bedroom homes, so we will have one tenant filled room to knock some cash off the mortgage payments, with the possibility of adding a room to rent. Once renovations are complete (cost of material only), we will have the home appraised. This is where I get a bit lost... when beginning the refi process, how much will the bank give you? Does it matter how much equity you currently have? What are the factors? Does the refi amount simply get added to your mortgage? For now (could be totally off) let’s say the bank gives us enough for a down payment on another home. We buy the home, live in it while doing the Reno, and continue repeating this process, all while renting out the previously reno’d home.
Please keep in mind I have never done this before, only been reading about it, listening to podcasts, etc. Poke holes in my plan, tell me if I’m completely off the mark.
