How the BRRRR strategy saved my bacon

What is going to happen when your investments don't turn out the way you expected them to? Do you have a back up plan aside from declaring bankruptcy or giving the houses back to your lender? If you don't have at least two exit strategies in mind (preferably more), then you are asking for trouble. 

Just recently I had bought a house with hard money, rehabbed it and was working on renting and refinancing it (doing the whole BRRRR strategy) when the bank I was working with said they wont make anymore investment loans. This was obviously a soul crushing moment for me. I was already calculating how much money I would get back from the refinance and how many more houses I would be able to buy with that. 

Luckily, the house is worth about $128,000 and I had purchased it for $48,500 and put $42,000 worth of work into the house. This made my all-in cost (including points and closing costs) close to $97,000. I usually got 80% of LTV with this previous lender which meant that I was basically going to get all my money back and then some.

When the bank I was dealing with shut me down, I immediately started talking to other banks and was quickly able to find another lender willing to do a similar type of loan.  Nonetheless, I put the property on the market and got a offer within a week for $130,000 which would have made for a nice flip profit of close to $20,000 after all expenses. I didn't want to sell the house but knowing that I have have options other than giving the house back to my lender definitely gave me some more piece of mind.