Hi, just a quick question on something I am trying to wrap my head around. First post so forgive me if this is done wrong. When using the BRRRR strategy and refinancing rental properties in order to acquire more, what happens if you refinance when your house is worth less due to a market correction or crash? How does that work? Do you get the same money you put in out or can you lose that if the house depreciates that amount? Sorry for the stupid question I am a beginner and just trying to wrap my head around this and see if it is a good idea in todays economy. Thank you so much in advance.
Im newer to this topic as well . my take on it is most banks will give 70% of the valve of the house. So on down years of home valve you would be looking at less money/loan amount also most banks do not like to loan money when market is down i believe. Also i think like with heloc they can close the loan in down markets and need to repay in so many days or if you lose your job.but not sure for brrrr. Best of luck
Im newer to this topic as well . my take on it is most banks will give 70% of the valve of the house. So on down years of home valve you would be looking at less money/loan amount also most banks do not like to loan money when market is down i believe. Also i think like with heloc they can close the loan in down markets and need to repay in so many days or if you lose your job.but not sure for brrrr. Best of luck
For the BRRR strategy - you are banking on the fact that the property will increase in value. If property values were to drop, then you would be cashing out on less or not at all. The cash out refinance will be determined by the current value of the property - which is determined by an appraiser at the time of the refinance.