Best BRRRR Method for beginners?

Question

I am a new investor who is in the education and raising capital phase. I have a question about the BRRRR method. Does it make sense to buy a property with a loan and then rehab it and then refi it after the rehab or is it better to buy the property cash and then rehab it. I'm wondering if using OPM in this situation will benefit me.

Whitney Hutten · Answer

@Adrian Beltran This questions is often asked in the forums... here is a "choose your own adventure" type guide to help you make the best decision for you.

PM me with Qs!

Krunal Patel · Answer

In BRRRR, what matters most is buying right in the first place (70%-75% ARV). Once you have a good deal you can decide which financing option you want to go with. However generally property would be in such shape that it will eliminate some of the financing options. You could use PML, HML, Cash or some other creative option.  You will not be able to get a conventional loan on the original property.

Jaron Walling · Answer

The BRRRR method is discussed in the forums everyday. All that matters is the DEAL> have you located a GOOD DEAL?

Money follows good deals. Private financing, personal savings, 203k, Conventional, FHA, any of these sources will set you in the right direction. I crossed out a few because of one reason. The best BRRRR candidate properties won't qualify. Distressed property with value-add is what you're looking for. If the property is fixed-up and move in ready you'll never pull the cash out. It will be trapped as equity until you sell defeating the purpose of the strategy.

Kenneth Garrett · Answer

@Adrian Beltran

Remember the concept is to buy properties at a discount and during the rehab process we are forcing the increase in value of the property.  As @Jaron Walling stated many of the conventional lending processes don’t work for the BRRRR.  Cash is the best method for beating out your competition and can be less costly in the long run.  Because you want to be a buy n hold investor doesn’t mean you can’t but a property that doesn’t require rehab or very minor.  Keep your options open.  Buy n hold has many variations to it; BRRRR is just one  tool in your tool box.

Adrian Beltran · Answer

Thanks that helps.

Best BRRRR Method for beginners?

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