Updated almost 6 years ago on . Most recent reply
Noob Questions about BRRR
Noob investor wanting to learn everything about BRRR. I have 10k cash and 25k HELOC on home "A" and am researching the best way to get into REI. I recently talked to another investor that recommended I take the 25k HELOC and put 5% down on house "B" that I then move into. I then should rent house "A" while living in house "B" for 6-12 months. Then refi house "B" put 5% down on another home (house "C") that I would move into then. Ultimately, he said I could continue in this process to acquire 3-5 doors and then should have enough to be able to start putting down 25% on each investment property and not have to move from home to home.
I am new to all of this. As I said I am looking for the best way to break in to REI. Here are my questions about this:
1. This sounds like a version of BRRR. Do you agree that this is a viable way to get in for someone that doesn't have a lot in cash or assets?
2. How is my debt to income ratio affected/managed during all this? Do my renters count as income so that it washes in terms of debt to income ratio enabling me to continue to get additional mortgages?
3. What should I be watching out for/ concerned about while taking this approach?