Buy & Hold Rental - to BRRR or not?

Question

Hi all,

Hoping I’ve got my lingo right here. So I’m a current home owner that is looking to buy my first MFH to live in and keep as a rental in the other units.

When it comes to buying properties to keep for the long-term cash flow as a rental, is it more wise to buy rehabable properties to do BRRR, or find an almost turnkey property and try to buy at quite below market value? If it helps- my goal is to buy 5-10 rentals in the next 5-10 years (well, that would be limiting myself and the sky is the limit, but with other life events let's just stick to that number). What method would be the best to keep the cash flowing and keep my capital churning to achieve this goal?

Ali Boone · Answer

Maybe there's some ideas in here for you-

https://www.biggerpockets.com/...

Nicholas L. · Answer

Hi @Johnny Lasek I think it will be difficult to find "an almost turnkey property...at quite below market value."  If it's below market value, it probably needs work, and therefore is a better candidate for BRRRR.  An optimal BRRRR really requires that you purchase with cash (or something cash-like) and not conventional financing.  That increases the chance that you'll be able to pull most or all of your cash out when you refinance.  You might be eligible for a low money down loan if you intend to live there, but you need to run the numbers.

Turn key is obviously a lot less hands on, but your cash flow may be lower.  Especially if you finance.