How to BRRRR with only $50k

Question

I have $50k cash. I am pre approved for a $250,000 loan. I can get an fha as I do not own a home.

My question is, how can i start to brrrr as fast as possible? As I cant find a house for $50k or less and rehab it. Should I go to a hard money lender, use that money to brrrr? Wait to brrrr and flip some houses?

What are my best options for gaining cash flow the quickest, so I can start brrrr’ing and build weakth?

Michael Dumler · Answer

@Kyle Knab, if you want to assume the risk of securing a short-term loan with high-interest payments while having zero experience in rehabs/managing contractors in what many believe to be a declining market, then proceed at your discretion. Here's what I would advise though, purchase a house hack deal that you can force appreciation into (sweat equity), finance via FHA 203k, or Fannie Mae HomeStyle renovation loan. This is a good deal that will allow you to obtain experience in both the rehab process and managing tenants.

Jaron Walling · Answer

Buy something with a conventional loan that needs work. The should be to move out and rent it after 1-2 years. 12 months is usually the minimum requirement for a primary. During that time fix up said property and value add. Refinance (if possible or makes sense financially), rent out the property, and deploy capital into the next property. Don't quit a regular job and reinvestment every dime.

Nicholas L. · Answer

@Kyle Knab

i'd advise against hard money on your first deal.  i agree with the others - try to find something you can do more of a live-in BRRRR to.  much less risky.  BRRRR is really, really tough right now.  you have to find a deal way below market where you know you can significantly boost the ARV; bring the rehab in on budget; and then break even or cash flow at today's rates.  if you don't have access to buy those types of deals, and a contractor ready to go, it's just not going to work; they're generally not available on the MLS.

Eliott Elias · Answer

You need to purchase a property and be all in at %70 or its retail value with the rehab.

Alli Breighner · Answer

Hi Kyle- I'd love to help you with the BRRRR method as soon as you'd like.

Feel free to shoot me a DM if you're interested in discussing details.

Steven Foster Wilson · Answer

Hey Kyle, FHA is a great starting point, talk with local lenders about their first time home buyer programs, some have 0% down, no PMI, etc. House Hacking can allow you to get started with appreciation and cashflow with very little down, you can even BRRRR it like I did if you add value! Best of luck!

Kevin Coco-Senyszyn · Answer

I think if you're starting out, start somewhere simple. House hack. Use an FHA loan to get a "fixer upper" that you can work on yourself and keep your primary income as it is. Bonus if you can find a duplex to fix one side for a year, switch sides and then fix the other side in year 2.

Eric Goldman · Answer

you can always do a purchase and rehab bridge loan.. typically the lender will finance up to 90% of the purchase and 100% of the rehab.

This is deal by deal and your credit score and experience will play a part in rate and terms. you will also have some start up money because they are on a draw process.

Some work arounds for that would be hire a contractor who under stands the draws and is willing to be paid after work is completed.

How to BRRRR with only $50k

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