Why is BRRRR better than creative finance?

Question

Seems like BRRRR is way more popular. Why are so many people scared of sub to deals?

Jaron Walling · Answer

I wouldn't use the term scared; it's just most investors don't want the hassle. We would rather buy a distressed property (for the right price) and have not strings attached. If a good deal is created a massive hurdle must have been knocked over. We can find capital for a rehab (PM or out of pocket) and refinance on my own terms. Speaking to the LTR crowd the higher rates don't bother us as much. As investors we factor it in before making offers.

The main challenge (I believe) with sub-to is finding sellers willing to entertain it. Given this stalemate market were experiencing it's pretty hard find those sellers. Motivated sellers are listing on the MLS. Not much motivation to do otherwise. Some buyers in specific markets are upside down on equity but there not behind on payments.

Ben Firstenberg · Answer

From my perspective, it comes down to the fundamentals.

Creative financing -- you're looking for sellers in very specific circumstances where they'll consider sub to or owner financing or whatever else. The vast majority of sellers just want to take their money and be done. It's a very high volume, low results approach.

BRRRR -- you're buying a distressed property and adding value to it YOURSELF. You have a lot more control over the investment, you're in the driver's seat. With creative financing, you're not really adding value, you're just capitalizing on specific situations.

Jessie Dillon · Answer

i don't think anyone's scared, they're just way harder to find. you can either spend a little more $ up front to BRRRR, but be able to go faster 'cause you don't have to wait around for deals, or you can spend lots of TIME trying to find creative deals. time = money.

Scott E. · Answer

Not scared of sub-to. It's just a unicorn strategy.

BRRRR is a real, tried and true strategy that has been used successfully since the beginning of time. The acronym is new but the strategy is as simple and reliable as it gets. BRRRR is how real wealth is built in real estate, whether you apply it to single family homes or 200 unit apartment complexes.

Sub-to on the other hand is a fad. It's a strategy that does technically work in real life, but its actual uses will be few and far between (and should be reserved for advanced, sophisticated investors). People like to talk about buying real estate with no money down, no credit, no income. It's a fun concept to talk about it and this concept no doubt sell courses to vulnerable or desperate newbies. But it's also a perfect example of something that is "much easier said than done"

Who else is ready for this fad to be over so we can stop seeing all these sub-to threads?

Why is BRRRR better than creative finance?

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