What about funding the Rehab in the BRRRR method

Question

I've been getting up to speed with the way that the BRRRR method works but I'm stuck on the Rehab, specifically how to fund it. For example if I only had 10k and was using every penny of it for a 20% down payment, how do I fund the Rehab? What are some strategies out there that have worked? I'm not posting this out laziness, I just haven't been able to find an answer for this particular question.

James Boprie · Answer

@Matthew Roder I took your advice and looked into Fannie Mae. That my friend is a gem.

Matthew Roder · Answer

@James Boprie you could consider a Fannie Mae Homestyle loan. It’s a rehab loan that allows you to purchase the property and fund the rehab all in one loan.

James Boprie · Answer

@Kenneth Garrett So I do have some options here, I just gotta be creative. I think my problem is that I'm getting 'too close' to the issue and limiting my sight on all the angles. "As little of my own money as possible," now that would be cool.

Kenneth Garrett · Answer

@James Boprie

You can use private lending, hard money loans, personal loan, credit cards (be careful with this), borrow from family and friends, etc.  Make sure you can refinance the property when it’s all done.  Remember the BRRRR concept is you are forcing equity so when you refinance, the value is high enough to pay everyone back.  Are you taking a loan at 90% LTV?  Make sure you will be able to borrow the money at only 10% down.  Most lenders want 20%-25% down.  Here is an example:

Purchase 100K

Rehab 20K

Total 120k

Value after rehab 160K

This does not take into account closing costs, holding costs, utilities, etc.

Good Luck.