The Buy in BRRRR Method

[Evan Griffin]

Hello BP,

I'm not 100% on the B in BRRRR.

Buying a property in distress (best deal) that may not qualify for a bank loan, requires you too pay cash.

Perks: Ideal in a competitive market closing faster gives you the advantage.

David Green talks about when getting pre approved, checking rates etc. to find out the banks LTV (loan to value) shooting for a goal of 75% give or take. Allowing you room to recoup your initial investment.

So when doing a BRRRR investment. Can you use a bank loan to buy and then refinance after rehab? Or are you going to the bank to research your refinance before you pay cash?

I guess between going to the bank for pre approval, loan information, and interest rates and buying/financing after the rehab has got me a little confused.

All said and done.

Can you use a bank to do the Buy in BRRRR and still come out on top? Or is cash the only way to go.

[Nasir El Ameer]

@Evan Griffin

Banks loans for BRRRR are doable if you find a deal that the bank will lend on.

If they wont do the deal then the next step is a bridge loan or hard money loan or cash.

The refinance is the key to the BRRR method.

You need to work with a lender that does not have seasoning requirements.

Banks are out of the question for this because they require you to own the property for at least 12 months before giving you cashout based on the appraised value after rehab.

An alternative lender does not have seasoning can get you 75-80% of the LTV after rehab.