So I just started reading the BRRRR book and in the beginnng, it talks about the traditional method of buying houses opposed to the BRRRR method. I could be wrong but it seemed like with the BRRRR method, people were buying the houses outright with cash and doing renovations with cash they had on hand. I certainly want to follow the BRRRR method but I definetly do not have the cash for both of those. If I want to finance a house from the bank and pay cash for renovations, is my plan for following the BRRRR method already done before it's even started?

Originally posted by @Michael Donato :

So I just started reading the BRRRR book and in the beginnng, it talks about the traditional method of buying houses opposed to the BRRRR method. I could be wrong but it seemed like with the BRRRR method, people were buying the houses outright with cash and doing renovations with cash they had on hand. I certainly want to follow the BRRRR method but I definetly do not have the cash for both of those. If I want to finance a house from the bank and pay cash for renovations, is my plan for following the BRRRR method already done before it's even started?

i had this same problem when I started.

doing the buying transaction and the lending transaction at the same time reduces competitiveness against cash buyers. deals with loans go slower, they are more complex, and trying to buy a distressed house with a loan is an added layer of difficulty. 

there are options to buy a home with a rehab loan (hard money, or 203k) but costs will be higher obviously. 

Hi Michael,

No, you would just have two financing steps in your plan. Instead of getting a loan for the house and paying cash for the rehab, you can buy the home cash which will make you competitive with other cash buyers and use credit to rehab the house. Home depot's commercial credit cards give you no interest for 60 days or you can just apply for a credit card that has 0% promotional periods to finance your rehab. Most importantly, if you do the brrrr in this manner, make sure your credit inquiries, projected rehab costs (credit card utilization), etc will not affect your cash out refinance application at the end of the project. If it would, it might be easier to get the property with a loan and pay for the rehab cash. Consult a lender or three about your eligibility including the what if scenario.

Todd

Thanks Todd, as of now it's looking like I'd have to put a small down payment on the property and then pay for renovations in cash. Unless I found a private investor willing to throw up all the cash for the property itself.