Save cash to BRRRR? Or finance and jump in?
Hi everyone,
Looking to start my real estate investing journey. I'm a fairly high earner and 26 years old. I'm leaning toward primarily doing BRRRR, however, I'm assuming it's going to take me some time (maybe 2-3 years) to save the cash necessary to buy my first property. I already max out all of my pre-tax retirement avenues, and that seems like a lot of time saving and waiting with a high opportunity cost in this current market, rather than jumping in and buying a rental property with traditional financing.
Does anyone have any thoughts or advice? Hopefully this makes some sense.
Thanks so much in advance.
Checkout Hard Money lenders. They charge you for their convenience, but they can get you into properties quickly and some help you directly with the Refi process.
@Matt Rekowski if you are looking to get started, financing isn't a bad option to start. This will allow you to get a feel for REI and understand the fundamentals. Also, as you mentioned, you will be waiting to get into a BRRRR situation. Financing will allow you to get a unit and hit the ground running, while also using that first unit to build into a BRRRR in the future.
Good luck and let me know if you need any help!
@Matt Rekowski As a high earner with a good W2 I would GO FOR IT. If you have taken the time to educate yourself and you are confident in your ability to analyze and source a deal, have chosen a niche to capitalize on the value you add, and have an exit strategy dialed, then yes your money will work way harder for you over time in RE than anywhere else. Educate yourself then send it!
If you can BRRRR, I would go ahead and BRRRR. It's just you usually need a private lender (or saved up cash) and, of course, a good deal to BRRRR.
I agree with Cayden. Financing is a great way to make your first investment, as it is a less "nerve-racking" and emotional experience putting 25% down on a property compared to 100%. Using bank financing will get you the experience you need before you jump in and BRRRR your first property. Additionally, if you finance a property that needs some renovations, you could always put "sweat equity" into the property, and pull that equity back out with a refinance when you're ready to do your first BRRRR in a few years. That way, the money you put down on your first investment won't be taken away from your cash pool for your first BRRRR.
Thank you everyone for the responses. The advice has been really helpful and has given me a lot to think about. Much appreciated!
Hi Matt! Have you given any thought to investing out of state? Long Distance investing has been easier than ever. I worked with a couple of turnkey companies to get started and I have been able to scale my portfolio to 12 units in Cleveland, OH. Feel free to reach out if you want to discuss.
Thanks for that, AJ! Definitely appreciate the insight. We‘re definitely going to be doing some long distance REI in the future, maybe in a year or two once we have our system better refined in our current farm area. I'll keep you in mind in the future though - thanks again!