Louisville, KY · Member since 2017 · 25 posts · 9 votes
Hi all,
I've seen a few successful investors in my area who buy properties cash, fix them up, then rent them out, THEN get a mortgage from the bank, get 75% of their money out and move on to the next.
Trying to figure out what the advantage of this is? To get the extra money you spent on rehab back? Are there any other advantages to this?
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
3y
@Edward Heavrin, you just described the BRRRR method and its advantages. You're correct, the strategy allows investors to pull their capital back out and use it as a means for the next deal.
@Edward Heavrin, you just described the BRRRR method and its advantages. You're correct, the strategy allows investors to pull their capital back out and use it as a means for the next deal.
Thanks. I suppose you can still BRRRR without paying cash? Just trying to figure out the paying cash bit.
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
3y
@Edward Heavrin, you technically can BRRRR with financing but you have to get the deal well below market value so you can pull your capital back out of the refinance. Easier said than done.
@Edward Heavrin, you technically can BRRRR with financing but you have to get the deal well below market value so you can pull your capital back out of the refinance. Easier said than done.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
@Edward Heavrin paying with cash will give you better control of the deal especially in this market. The seller will pay more attention to a buyer who has shown their ample bank balance. Many properties are coming back on the market due to funding problems. Borrower may not qualify or want to qualify given rate bumps. All the best!
The strategy worked for a while, but be careful. Banks are getting stricter with cashout refi. Crunch your numbers and make sure the deal will pencil out before you go through with it. Buying with cash can possibly get you the deal, but so can paying more than anyone else-just make sure you talk to your lender and find out how they treat cashout refi versus straight refi. The market is changing so past success and strategies might not always work in current conditions.