Should I Use My Own Cash For Brrrr Method

[Alessandro A.]

I have savings of around 90k. I’m looking to buy a distressed property and be all in after rehab at 75k. Are there any cons to using 75k of my own savings, or should I pursue a private or hard-money loan to acquire and rehab a property. Thanks

[Danielle Wolter]

If you're planning to use the BRRRR method I would use cash. Some other on here may not agree, but I believe buying with cash is #1 cheaper, #2 easier. In theory, after you rehab and rent, you'll be able to do your cash out refinance, and just put your cash right back in the bank for your next property instead of having to pay back your HML.

[Alessandro A.]

@Danielle Wolter Thanks. That was my original plan. Just wanted to see how other investors went about purchasing their deals and if there were any benefits to financing the purchase and rehab as opposed to using my cash.

[Danielle Wolter]

@Alessandro A. There are benefits of using other peoples money, I just prefer cash. That said, I always make sure I have plenty of cash reserves as well. I like to keep 6 months of living expenses in cash reserves just in case. 

[Alessandro A.]

@Danielle Wolter if I’m all in at 75k, I’ll have 15k until the refinance, which I think is a sufficient number.

[Brent Paul]

I also think cash is king here. You won't have to rush the rehab and depending on your monthly rent you could potentially see all your money paid back faster than you think. And you won't have to rush repairs to pay back a HML.