Line of credit brrrr-ing

4 Replies

Let’s say I had a portfolio line of credit worth $100k and I were to use that to invest with the brrrr strategy. Would it be better to

1.) Purchase 1 property in full & renovate then payback line of credit with cash out refi money.

Or

2.) Purchase 2-3 cheap properties with minimum down payment (20%) on each, renovate then use cash out refi to pay off line of credit.

I hope this makes sense. Any better ideas for using line of credit?

@Alex Bernth

The power of cash will open doors for acquiring properties at greater discounts over financing. Also, purchasing with a loan and then cash out refinancing will cost twice as much in lender fees and nearly twice as much in closings. I'd just do one at a time with the cash and use the down time to keep your acquisitions funnel full.

The next question to be asked after your question is: Are you realistically set up to rehab 2-3 properties all at the same time and limit the rehab time so that your carrying costs are limited as much as possible? If you don't have the team in place and have had prior experience with them doing multiple deals all at the same time, then my answer would be to do one deal at a time to limit your risk and costs.

I hope this helps 

@Alex Bernth especially early in your investing career doing 1 at a time will help you navigate doing multiple properties in the future but I would say that the loan you are prequalified with on the refinance step would assist in telling you how many properties you can do at once.  If you have not been prequalified yet I would certainly encourage you to do so.  Hope this helps!