Starting BRRR with a construction loan?

Question

I am wanting to start investing in real estate in the Joplin, MO area and I am wanting to use the BRRRR method. I know that the best method is to pay cash down for the first property; but would taking out a construction loan to finance the property, then refinancing that loan after the property is rehabbed and rented work too?

The time to buy would not be 7-10 days because the bank is involved but it would make it easier because I would not have to pay as much out of pocket initially.

Account Closed · Answer

@David Lundy Welcome to BP! Since you mentioned construction loan, are you looking to build a home or is there a pre-existing one already built? It sounds like you are looking at a rehab loan if it is the latter. Regardless of whether you pay cash or finance, you can still make money as long as your numbers work out. Have you done the market research to see what the after repair value is based on recent comps? If so, does the property look favorable? Feel free to reach out with any questions.

Nick Coble · Answer

Yes. I am in the process of doing this. Research done. Sending analysis to bank for pre-approval today. I've also used a local hard money guy with success. Lamar area is where I've focused prior to this current deal I'm working toward.