How should I finance my renovations when doing BRRRR?

Question

What would be the most effective way to ensure I have enough money to rehab a property in BRRRR? Would I use a portion of my equity from refinancing another property? A separate line of credit?

Tracy Mandell · Answer

Hi Andy,

You are definitely in the right place! BRRR's are my game plan as well, my best suggestions is to click on "Education" above, type in "BRRR" in the topics box and listen to the information on Analyzing BRRR's and BRRR Strategies, look up all of the BiggerPockets BRRR Podcasts and I have also ordered the book "Buy Rehab Refi and Repeat. You will get all your questions answered and more. Good luck!

Caleb Brown · Answer

Many of my clients use HELOC or the money from a previous flip/BRRR. You could go HM or private money route. Another is just use cash if you have it

Andy Eakes · Answer

I'm not sure any outside person can tell you which is most effective for your case. It will all depend on how you feel you can best leverage the most money. The whole idea of the BRRRR is to use the previous deal's money so I would start there. There are also construction loans and other ways of financing renovations/new-builds. I would be careful with any large lines of credit. Wells Fargo recently ended all personal lines of credit. They allowed some people to keep theirs after some backlash, but not all. And it shows the darker side of the risk involved with using lines of credit to invest in deals.

Hopefully that helps!